Cross-Eyeing: Selling EUR/CHF at 1.0500 – Trade Closed +50 Pips

Trade Closed: 2011-08-12 02:08

In case you didn’t see my tweet yesterday, I said that I moved my stop to 1.0450 when I was up about 170 pips. In the process, I locked in 50 pips and secured some profits.

EUR/CHF 1-hour chart

It’s a good thing I did, too! Once again, the Swiss National Bank (SNB) moved the markets, showing concern about the strength of the Swiss franc. This time, they said that pegging the franc against the euro wasn’t out of the question. Now, I don’t know how sincere SNB officials were, but this certainly spooked investors enough for them to dump the franc!

I actually got stopped out before the SNB announcement, but either way, I’m happy with how I managed this trade. If I hadn’t moved my stop, I would be hitting the driving range right now, letting my frustration out on how I let a trade where I was up nearly 200 pips turn into a loss. Instead, I made about .33% on this trade.

Trade closed at 1.0450 : +50 pips / + .33%

One thing I’ve noticed is that there have been a number of trades where I was up over 100 pips, but I let the profits slip through my fingers and ended up with a loss. I think this trades shows that I should be quicker to lock in profits and adjust.

That’s all for now! Time to enjoy the weekend and enjoy my small win. Hope you guys did well this week and banked some profits as well!

Trade Idea: 2011-08-10 03:05

EUR/CHF 1-hour chart

Call me “The Baker” ’cause I’m looking to make some dough and I think EUR/CHF has got the ingredients I need!

On the fundamental side of things, it makes perfect sense to me. The Swiss franc has been the strongest currency year-to-date, and it’s been downright BEASTLY over the past couple of weeks.

Safe haven flows as well as U.S. dollar weakness have made it the top choice among traders, and I have a feeling this isn’t a temporary thing. Yesterday’s FOMC statement was pretty gloomy and I think that should earn the franc a few more fans. As for the euro, well, we all know the euro zone has its own economic problems to contend with.

On the technical side of things, I’ve also got a few reasons to believe that the pair could turn around soon.

Price is already in the area of the Fibonacci retracement levels, which isn’t too far away from the 1.0500 major psychological handle. Now, this level showed interest when price touched it yesterday, so I have a feeling traders will continue to watch this level closely. Stochastic also suggests we could see further bearishness soon as its already forming a bearish divergence from price.

Since both fundamentals and technicals lined up, I didn’t hesitate to set orders to sell. Here’s how I setup the trade:

Short EUR/CHF at 1.0500, stop loss at 1.0650, profit target to be determined.

My stop loss is 150 pips away, not only because that sets my stop above the WATR and 61.8% Fib, but also because it’s roughly equivalent to half of the pair’s WATR pre-intervention days. As for my profit target… well, I think we could be in for a long ride, so I’ll play it by ear and hopefully milk the trade for all its worth.

So what do you think of this setup? Agree? Disagree? Feel free to share your thoughts with me on Twitter or on Facebook!

Peace and good luck to all!

  • Moraru Cosmin

    It will go indeed down (the EUR)  vs CHF, but expect this to be a 5 – 7 days trade. 

    problems with Kindgoms of Croissants (aka France) are at the beggining, and Italy seems to be putting up some fight. 

    expect to see 100 – 170 PIPS swings to minus then back on track.  

  • ケー ちゃん

    Im shorting again when the timing is right. Similar to JPY, it seems no matter how much their central bank intervene, they just cant stop.

    • sasa2340

      I strongly agree with him, ke-chan.  Like Japanese intervention, the market makers know people will sell those safe-heaven currencies while those winning traders (market makers) will be happy to buy.  Japanese governors should’ve known how to trick those dumb moneys to buy…. They just attempted to surge the USD/JPY tooo fast…. Oh, my tax is liable to pay off the stupid action.  Anyway, as the result, such buying power overcomes the selling then…. yes, unbalanced market sentiment in supply and demand creates advantageous price action in Franc.  

      Furthermore, traders hate such gloomy comments from the FOMC. So, that should motivate the traders to get franc for the risk aversion (as well as putting their money on gold :D).

    • cyclopip

      I agree with you as I am still bullish for the CHF. However, it may be a while before the market starts buying it again. The Swiss National Bank’s threat of pegging the CHF to the euro is far greater than the one-time interventions that we’ve seen from the Bank of Japan.

      Pegging the CHF would place continuous pressure on the franc, whereas direct market interventions (such as what we saw with the JPY) tend to have short-term effects. This isn’t to say that the SNB will be able to stop the CHF from rising. I just think it may take some time before it gets back on course.In any case, it would probably be best to wait for cues from the market itself before we commit to buying CHF again.