Trade Idea: USD/CHF’s Falling Channel Retest

Can you believe we’re into the second half of the year? I’ve found a potential forex trade on USD/CHF if you’re looking for a swing trade to jumpstart your July trades!

As you can see on the chart below, USD/CHF has just bounced from the .9800 area, which lined up perfectly with the top weekly ATR and a falling channel resistance on the 4-hour chart. Not only that, but stochastic had also just gone down from the overbought levels. Since the trend hasn’t been broken since November last year, I’m pretty confident that the dollar hasn’t seen its last bad day against the franc.

USD/CHF: 4-hour Forex Chart

USD/CHF: 4-hour Forex Chart

Fundamentally I’m banking on the Fed adjusting its rate hike schedule to push this pair lower. Now that Britain has voted out of the EU, Janet Yellen and her friends have a good reason not to raise its rates at all this year. Heck, Mark Carney has already started the party by hinting at incoming stimulus from the BOE next month! If you remember, the Fed’s statement last month already reflected that there are fewer FOOMC members who are expecting a rate hike or two this year.

As I’ve updated on my tweet yesterday, I shorted at market (0.9733) when I saw a strong bearish candle following a bounce from the resistance level. Unfortunately, I might have entered too early as my trade got caught in the Carney-related volatility. It popped back up and is currently chillin’ at the week’s open price. The trend still looks valid though!

Here’s the plan:
Shorted 0.25% of my account at market (.9733). Stop loss is at .9900, which is above the channel and top weekly ATR. Initial profit target is at .9500.

I’m planning on adding to my position if there’s a strong bearish momentum in the next couple of days. Of course, I could also close the trade early if the pair breaks above the channel or there’s a strong catalyst that pushes the dollar higher (I’m looking at you, NFP!).

What do you think of this setup? Is this something you would take for yourself? Also, do you have any tips for me?

Thanks!

XOXO,

Huck

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