And I’m in! I was able to catch a quick pullback after the descending trend line breakout on GBP/CHF and my trade’s looking good so far. If you’re wondering what I’m talking about, make sure you’ve seen my initial GBP/CHF trade idea first.
Price retreated to the 50% Fibonacci retracement level and 1.3800 major psychological support this week when U.K. reports came in weaker than expected and the pound actually reacted to these figures. In particular, the manufacturing and construction PMIs both tumbled and fell short of expectations, with the former even sinking into industry contraction.
Support near the broken trend line still seems to have held, though, and the pair might be in for additional volatility with the U.K. services PMI up for release. A stronger than expected reading could give the pound’s climb more traction, but I’ll be ready to exit early in case the report prints another disappointment.
There are no reports due from the Swiss economy today since banks are closed in observance of Ascension Day. Still, I’m thinking that the franc is in for more weakness since SNB head Thomas Jordan recently reiterated that the currency is overvalued and that they’re ready to intervene if necessary.
For now, here’s what I’ve got:
Long GBP/CHF at 1.3825, stop loss at 1.3475, profit target at 1.4275. I’ve risked 0.5% of my account on this setup for a potential 1.28-to-1 return-on-risk.
Remember to never risk more than 1% of a trading account on any single trade and to adjust position sizes accordingly. Create your own ideas, don’t simply copy what I do, and make sure you’ve read our risk disclosure!