We’re looking to take USDCHF long off the table sometime on July 3rd. We think that is when consolidation will occur and an optimal exit will present itself. This trade has been plagued by oil and gold breaking highs. This trade is based on mean reversion of currency indices as they are easier to forecast than actual pairs. In the attached image anyone can see the CHF and USD currencies are at extremes. If I show you a historical chart of these indices you’ll quickly see that currencies do not stay at extremes for a long duration and they tend to move up and down for similar durations with similar angles.
You might think the purple currency on the bottom of the screen is ideal for appreciation but that is the CA dollar and it’s the most volatile currency on the index indicator. I’m watching it from the higher timeframes waiting for it to really hit bottom; then we’ll look to the hourly or 15minute indicator for likely entry against the most overbought currency. That should happen by July 10th and I’m expecting EUR to be the currency we sell against the CA dollar. That trade might be a short EURCAD for 2 weeks duration when we confirm the entry.
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