Special Report: Trading the GBPCHF

Is an alternate choice of the cross rates for the weeks to follow. The process of deduction based on the market's behavioral price movements has led to this preference. This process is not as easy as simply choosing which of the currency pairs would be appropriate to trade, aside from the market's potential that it would generate. The market psychology has played a vital role based not only from the current price trends, volumes and open interest; but including the historical correlations of each currency pair with a dominating and least dominant pair to choose from.

Trading the GBPCHF for the following weeks ahead has bottomed to two basic reasons in part of its technical overview from the chart patterns. One reason is that the British Pound has shown its resiliency for the past few months from its recovery price reversal which was at the 1.5270 GBPUSD rate which has sustained from October 06, 2011 extension & base price. Secondly, the USDCHF rate of 0.7071 has been the strongest appreciation for the Swiss Franc compared with the Japanese Yen's 75.55 intervention price levels. Timing market price movements is never easy, although a lot of traders and analysts have tried to anticipate such market speculative reactions but not everyone would have the distinct privilege of riding in one.

The GBPJPY trade of October 27 is one of those times where such an anticipation and a speculative decision was made prior to the Bank of Japan's intervention on the USDJPY rate. Luck and skill did play well and paying off for this trade which has been riding the price trend to this writing. The irony of the market's reaction before and after such volatile price action would 'stall' or others would term it simply as directionless as pairs would consolidate at a tight range. And the next move would come towards the closing of the week or month where position adjustments are made.

With trading heading towards the week, not much to really weigh except for the usual news wire crossing between the Euro zone with Greece, Italy and other contagion effects spilling over the rest of Europe. where a political divide and a financially strapped EU members are weighing a negative tone for the rest of the members as well. The other reports such as the German CPI to hold the same. While the ECB monthly economic report and the Bank of England's rate decision on November 10 and the US University of Michigan's confidence report may provide a clearer direction for other market participants and investors.

CCY CHOICES: GBPCHF STRATEGY

Long Position / on Market Condition Steady
Trend : Bullish ( UP ) after BOJ Intervention
Signal Indicator : Breaking a Channel / Trendline Resistance
Strategy : Using the USD Index as a Primary Indicator
Trade buying only on the way up from a correction
Exposure : 500,000 in leverage amt./ own discetion
Position: Long ( Buy ) on the way up with volumes * momentum
Current Price: 1.4250 as of 11.06
Entry / Exit : 1.4245 OB / 1.4680 OH
Risk / Tolerance : 1.4080 ( -165+/- ) on entry price +/-             

Probable loss / Stoploss: 1.4000 ( -245+/- ) on entry price +/-
Potential Profit 1.4680 /even ( +435+/- ) OB on entry price
Rationality : 2.x from risk tolerance / Net Exposure pre-calculated versus overall trade position on margin requirement/maintenance / swaps / point value
Time Table : Within 1-2 week period + / -
Status: Closed / settlement based on net percentage gain or Loss on overall net position of trades within above period
Others: Using the USDCHF as cross hedge strategy for contingency