Still on the Aussie, I really think there is a position to buy the CHF on this currency pair. With market moving fundamentals such as yesterday’s OPEC compliance report, Japanese Preliminary GDP data and year over year inflation data from China, it was OPEC reports that drew much of my attention. From November’s agreement, the cartel had agreed to cut output to a tune of 1.16M barrels a day for an estimated period of 6 months though there were other cited sources who saw this window being extended to the end of the year. With yesterday’s release, data showed that OPEC members were compliant of the agreement and progress was visible with 800K barrels cut to ~32M barrels per day cumulatively. However, these positive baby steps looks to be neutralized by rising number of oil rigs as reported by Robert Hughes, at the moment it stands at 591 rigs in the US alone, causing Oil prices to be stuck between the all familiar $50-$56 range. If future projections are taken into consideration, OPEC’s effort of stirring demand by creating a gap will all be futile as more production will be from non-OPEC members. It’s already evident that the second largest consumer of oil is ramping up production.
Today’s fundamentals will be circling around Yellen’s confessions before the SBC at 1500GMT. Watch this keenly any hint of new policy and most importantly the timing of a new rate hike will definitely be market moving. Rate hike probability is at 15% this coming sitting according to Fed Fund future’s tracking tool, so any significant USD appreciation will be less likely unless Yellen say’s something unexpected. Remember, the USD was on the receiving end after news of Michael Flynn resignation and historically, the USD don’t loss in 2 consecutive sessions. Expect it to bounce back in the NY session.
For now, let’s look at the AUDCHF technicals. First things first, this pair is over extended from the BB point of view. Yesterday prices closed above the upper BB and since this is a misnomer, price will likely correct and trade within the bands. Look to enter short in the 15 min chart if you want to catch the correction early otherwise I recommend entry in the 1HR chart-which by the way is in the overbought zone. The daily chart is also overbought and since this is a low ADR pair, targets of a 100-200 Take profit pip range will be reasonable. This target fall in at 0.76 this is the resistance zone in the daily chart.
So, this will pan out as follows:
Sell: 0.7720-Suggested but if not comfortable wait for a strong stochastics sell signal in the 1HR chart.
Stop Loss: 0.7780
Take Profit: 0.76
Have a good trading day.