Nibbling on AUD/CHF

AUD/CHF has been moving higher nicely after finding strong support around .7800 this year. After a small pullback and bounce, it might be time for the pair to make a new leg higher.

AUD/CHF 4 Hour Forex Chart

AUD/CHF 4 Hour Forex Chart

As mentioned in the four hour chart above, AUD/CHF fell after last week’s RBA meeting minutes that cited a few factors that could potentially be a problem for Aussie strength. It looks like forex traders have shaken this off pretty well, mostly on speculation that the SNB may act to lift the EUR/CHF floor if the ECB does cut interest rates next week.

The pair is back to retesting–and possibly breaking–previously strong resistance at .8300.  Of course, I won’t know for sure if it will break until the market steadily stays above .8300, but with risk sentiment shifting back to risk-on, it’s worth it for me to take a nibble, especially with the positive interest rate differential.  For now, I’ve set orders to go long at the major psychological level, with a wide weekly ATR stop and my target at the next major area of interest on the higher time frames.  Here’s what I am doing:

Long half position at .8300, stop at .8140, adjustment target at .8500

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 0.50% for now and this initial trade structure gives me a 1.2:1 potential return-on-risk, but most likely, .8500 is the level where I’d adjust to lock in profits and scale in to maximize profits if it gets up there.  If I don’t get my entry at .8300, then I’ll probably enter manually, but for now, I’ll let my orders work.

Also, I decided to close my short orders on EUR/JPY at 140.00 as the pair has moved lower from there quite a bit.  I’m still watching this pair, but for now it’s a no touch for me as I don’t think there’s much move this pair can move close to ECB monetary policy meeting next week.