This thread is about Central European currecny direction in the long term (1year). I have a very serious question to ask. I don't speculate in leveraged currency but I do swap at my bank my savings account from one currency to another when something looks real good and has a long term perspective. I'm short the dollar long the czk in my bank account from 24.10. I simply did this when Beranke came in last year when my chart setup said it was a good idea. I based this on him being dovish and rates staying steady not increasing. A pure fundamental move done with a little charting. The problem is should I swap back into the dollar. This chart is screaming to me anyway bearish on the dollar long the crown, on this retest to the major breakout point. My concern is the dollar bears my be stalling here and if they stall here on this chart setup in my eyes its pretty serious failure. I view 22.40 as a big bear failure thats where I will swap. I would love to have some opinions on this because this is not just a trade but this is my bank account.
A lot changes in the currency market in 24 hours. I feel much more comfortable when I look on this chart today.
I would jump out in the first signs of USD support/strength in the daily chart. (Around 21.30/21.40... who knows...) The USD Index seems bullish to me in the daily http://stockcharts.com/charts/gallery.html?$USD and may develop into bullish in the weekly soon...
Thanks for your opinion. Although, I would like to point out the US dollar index is a poor index for European currencies that don't use the EMU. The dollar index has to much JPY, AUD, CAD in it. These currencies don't mean to much to the CZK and SKK.
Well, I am actually from the Czech Republic, so your post caught my eye I have a few questions: do you think that your strategy is going to outperform other investment strategies, given the fact CZK has a much lower interest rate than USD? Why did you choose CZK in particular, are you considering switching to other semi-perifery currency? I am myself looking for some possibility to hedge my account against the USD decline, the problem is my account is too small compared to the contract size of FX futures.
I'm also living in the Czech Rep. Thats the only reason why I took on a position in the CZK. There are probably a lot of better bets out there. This was the most simple choice for me out of conveince. I don't speculate in forex this was a long term investment. I'm physically holding the CZK currency in my bank account, so in effect its not a financial instrument. Which means I can hold it a long as I like. Kind of like owing a stock instead of an option or SSF. To answer your questions directly. I entered very early last year on this position at 24.10. It turned out to be a pretty good investment it returned a little over 12%. Thats more than double the risk free investment rate. In my opinion this investment was almost a risk free investment. This year I don't expect much out of it. However, the chart has formed a major bearish pattern for the dollar, so its possible the crown gains even more ground on the dollar in this year. My system for entering currency is based purely on fundamentals with just a requirement of one chart pattern. Its based 100% on U.S. rates. If rates are going to be lowered or on hold with the prospect of further lowering in the U.S. I'm short the dollar. If rates are going to be raised I'm long the dollar. Its really that simple. Its not to difficult to figure out which way rates are going. All you have to do is keep tabs on the eurodollar contract. Not the eur/usd but the contract on the CME the most liquid contract in the world. I expect the FOMC to be on hold for a bit longer but sooner or later they will reduce rates. I think its very unlikely they will raise again. Bottom line is that it most likely means a weaker dollar in the long term. By the way where do you live in the czech rep.? I live in Prague. The last couple of days have been nice for the czk. The dollar bears have made a stand at the 21.80 level. I just hope they will not retreat and continue to maintian that posture.
I don't think anybody is going to tell you for sure what to do but chart is still saying short. (From your level) I guess you should hold and see what will happen. (I wouldn't initiate short from here). My opinion is dollar is undervalued but unless Iraq problem gets solved or Czechs vote in commies (or people seriously to the left) nothing much will happen. Admittedly opinions mean shit in this business. I wonder what spread the bank charges you.
I am living in Prague too. Is it really that simple and riskfree? Rising interest rates USD up, lowering or stable i.r. USD down? And other question, then why not choosing for example HUF, which pays higher interest than CZK?
Hungary is in bad shape, if there is going to be currency crisis in Central Europe its going to happen there.