Sunday, June 24, 2007

Commercial Traders Are Buying The Swiss Franc



If you look at the above chart of the Swiss Franc (courtesy of barcharts.com) you will notice that this currency has been trending sideways for about a year.

The lower pane plots the positions of the 3 players in the market. All I am interested in is what the red line is doing. The red line represents the net position of the commercial traders. When this red line is above zero, the commercials are net long, when this line is below zero the commercials are net short.

Right now the commercials are holding their largest net long position in two years. You'll notice in the past every time the commercials were at least 6000 contracts net long, the Swiss would rally. The commercials are now close to 10,00 contracts net long.

I take this as a bullish sign that the Swiss franc will probably rally in the coming weeks along with the Euro and the British Pound.

2 comments:

Jeff said...

The GBP has moved 400 pips and the EURO and SWISS have move 200 pips. If you were not in it yet, how would you appoach this?

Kevin said...

Hi Jeff,

You just have to wait for a dip...maybe a 33% or 50% pullback might be a good spot to jump in... Too much risk now to buy here..