Hello fellow traders!
What an incredible week we had. Just when one thinks the markets can't get any crazier, Swiss associated pairs go ballistic. Luckily zero parameters were met to signal a position in any of the Swiss currency pairs.Whether this was just luck or this happened because my strategy somehow 'knew' not to be in those pairs I really don't know. I think what happened was my strategy waits for specific situations within pairs so the price will move rapidly in a given direction, and perhaps the Swiss National Bank (SNB) also knew this situation existed and timed the information release to take advantage of this. Hence a move that magnified beyond most imaginations. The Swiss Franc moved 17% on average against the Eur, Gbp, Usd, Aud, Cad, Jpy. This in turn moved the Eur which is direct competition, an average of 8%.
By the grace of a higher force we have been blessed (hopefully) with the parameters having been met to buy the Eur/jpy pair. First the pair has sold off so much, I can not imagine there are any more traders able to push the price lower, nor is there anymore stops to be run (if you believe in that). Reading over other traders forecasts on the Eur/jpy, it looks like most of them are calling for a push lower, talk about missing the boat! I could see being scared to trade the Swiss Franc and maybe the Euro, but calling for a push lower seems improbable.
Helping out our positioning early this morning, Germany's Bundesbank announced the continuation of repatriations of gold from London, New York and Paris. Bundesbank specifically declared 120 tonnes of gold was transferred from Paris and New York, 35 & 85 tonnes. To me this seems as though this informational press release was done to reassure the world that the Euro has a solid foundation and to help recoup some of the massive sell off that just happened. Looking at charts, the start of the rebound seems to coincide perfectly with the time I believe the information release was made. Along with this information, a repatriation timeline, table was also released further showing their commitment to stabilizing the Eurozone.
In case you have been living under a rock, the European Central Bank (ECB) is meeting Thursday January 22 over deposit rates, refinancing rates and a bond purchasing program. This program would consist of purchasing €550 billion ($640 billion) of bonds, independently through each nations national bank, the purchases will represent 20-25% of the individual nations debt. Greece will be excluded since their bonds do not met the minimum criteria. If this bond purchasing happens which is most likely, I think the Euro could get incredibly strong against the other major currencies and create a massive up swing for our long Eur/Jpy trade. Let's cross our fingers.
Let's go ahead and keep holding our position and hope for the best and reconvene tomorrow or later this week.