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Setups Ahead of ECB and BoE Event Risk

Setups Ahead of ECB and BoE Event Risk

2011-10-05 18:44:00
John Kicklighter, Chief Currency Strategist
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I haven't updated my analyst pick in some time; and given the current activity of the market and the impending event risk over these next few days, there is no better time to dive back in.

Currently, I have a few open positions. The setup that has been on the longest is a long EURCHF that has a tiered entry that averages out at 1.2219. This was meant as a position to play the the SNB's efforts to keep the 1.20 floor in place and further push the EURCHF exchange rate up going further. It is now approximately 130 points in the green; but is extremely volatile. This is one to play out over time and maintain forgiving stops.

A recent setup that has done well, my GBPCAD short (1.6363) on a very broad range enjoyed the recent strong bounce in risk. After this tremendous run, I decided to take half off at 1.6160 and trail my stop on the second half to break even. There is considerable volatility risk here with the BoE on deck.

The final active trade is a volatile one. Following the gradual rising trend on the USDJPY 60 minute chart, I'm looking to scalp swings from the patterns extremes for 20-40 points at a time.

For setups going forward, I'm very interested in the BoE and ECB. I'll cover the scenarios more indepth on the video and Daily Fundamentals; but there is heavy speculation here with prominent biases that will very likely catch a large contengent of the market off guard. I like EURCAD and EURNZD for short-term setups under a volatility regime. Greater potential though rests with EURUSD and GBPUSD.

A break back above 1.34 for EURUSD would be a strong reversal sign after a false bearish break while a hold at this level would be a very strong former support standing as new resistance (one of the best continuatin patterns). The key here is the fundamental bearing the market's take. GBPUSD is in a similar situation; but the privot rests below in zone support 1.5300/50.

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