Today we will issues a one-two-three punch to your forex portfolio in order to rattle the cage so the pips can fall into your lap; make sure to bring a big bag of it. We will start in Asia where the Bank of Japan (BOJ) shook the markets with an announcement that it will tweak its monetary policy. The tweak was focused on how the Japanese central bank will purchase long-term debt as it already rolled back the amount it bought. The Japanese Yen advanced on the back of the news while equity markets moved in the opposite direction while managing a positive close.
The BOJ cut its purchases of government bonds with a maturity of over 10 years by ¥10 billion. As most major central banks are reducing stimulus, BOJ Governor Kuroda has communicated to market participants that the central bank will keep its stimulus in place. Today’s announced tweak did unnerve some traders as a sign that a change may be on the horizon fast than the BOJ is currently admitting. Any reduction in the stimulus will be a positive for the Japanese Yen which was evident by today’s rally in the Japanese currency. The trend of a stronger Japanese Yen is set to continue throughout 2018.
On the other side of today’s safe haven trade is the Swiss National Bank (SNB) which unlike many other developed central banks, is listed on the Swiss stock exchange in Zurich. This means besides being a central bank and the steward of the Swiss Franc, it is also a publicly traded entity which can distribute dividends to its shareholders. 2017 has been a record breaking year for the SNB’s performance with a profit of CHF54 billion. The drop in the Swiss Franc exchange rate was cited as the biggest contributor of the profit.
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Thanks to the 8.4% decrease in the EURCHF, the SNB recorded a profit of CHF49 billion on its foreign currency holdings while Gold added another CHF3 billion in profits. SNB Foreign Exchange Reserves equalled CHF744 billion and the Swiss central bank declared a CHF15 per share dividend which is the maximum allowed under Swiss law. Here are our three safe haven trades as the BOJ tweaks its policy and the SNB declares a maximum dividend. Cash in from the excess with a smartly created forex portfolio and add the following three trades to your PaxForex account today.
Forex Profit Set-Up #1; Sell USDJPY - D1 Time-Frame
The USDJPY is being pressured to the downside by its descending resistance level which originates at the top of its horizontal resistance level. This currency pair is currently exposed to bearish pressures from a technical perspective as well as to bearish pressures from a fundamental point of view. Therefore forex traders should expect a contraction down into its horizontal support level from where price action should be monitored further for additional downside potential. Any level below 113.250 represents an attractive short entry opportunity.
The CCI has broken down below the 0 mark and confirmed a momentum change from bullish to bearish. More downside is expected as price action will extend its current trend. Add over 500 pips to your forex account every month by following the Forex Fundamental Analysis section here at PaxForex. Get the best trades each day and earn with our experts.
Forex Profit Set-Up #2; Sell EURCHF - D1 Time-Frame
The EURCHF was recently rejected, for the second time, by its horizontal resistance level which ended the preceding up-trend. As an ascending support level is approaching price action, pressures for the next move are building up. This could prompt forex traders to take profits after last year’s sell-off in the Swiss Franc and result in a breakdown below its ascending support level. More downside should be expected if a breakdown is sustained with the upper level of its next horizontal support are as the first major support level. Forex traders should place their short entries anywhere above 1.1725.
The CCI has already completed a breakdown below the 100 mark as well as the 0 mark with bearish momentum now in the driver’s seat. Forex traders should monitor for a move below -148.70. Forex Recommendations are issued by PaxForex analysts every day which help all traders navigate the forex market in order to identify profitable trades.
Forex Profit Set-Up #3; Sell CHFJPY - D1 Time-Frame
The CHFJPY is in the middle of its corrective phase which started when price action touched the lower end of its horizontal resistance area. After that this currency pair has accelerated to the downside. Forex traders should expect a continuation of the down-trend until price action can challenge its horizontal support area. Any level above 114.000 represents a good entry opportunity in order to profit from the second part of the current move to the downside.
The CCI has collapsed below the 100 mark with enough momentum to complete a breakdown below the 0 level for the final confirmation that bullish momentum has been replaced by bearish momentum. Open your PaxForex Trading Account today and add this trade before the corrective phase is concluded.