Trade Update: 2012-2-23 02:49
Sadly, the potential head-and-shoulders pattern didn’t work out and ended up as a loser. It appears that I picked the wrong pair, as it was against the pound where the dollar rallied strongly, and not versus the franc. Drats!
Total Loss: -55 pips / -1.0%
Am I feeling bad about the loss? A bit, but I’m immediately over it. I believe that I managed my risk well, and didn’t take any more losses than I was willing to. I also did not deviate from my trading plan.
But I have to admit, I could’ve ask you guys for advice first before pulling the trigger. Waiting for an upside break, as some of you suggested, was a safer strategy. Oh well, next time I’ll be sure not to be too aggressive.
Thanks for all the feedback guys!
Trade Idea: 2012-2-21 22:25
Keeping close tabs on the pair, I noticed that on the 1-hour chart, it looks like an inverse head-and-shoulders has materialized around the major support. This is the same pattern that Big Pippin pointed out on the 4-hour timeframe.
Since an inverse head-and-shoulder pattern that is located at the end of a downtrend usually indicates a reversal, I have decided to be bold and enter at market (.9130). Yeah, I know that the School of Pipsology tells us that waiting for a neckline break before jumping in on a trade is usually the better idea with this chart pattern.
However, I didn’t want to miss another good trade like what happened with GBP/USD last week. Don’t worry, I promise to manage my trade carefully. I’ll probably just add another position once the pair breaks the neckline resistance around .9150.
One thing that I am also banking on is that the market will probably be very hesitant in selling this pair. The Swiss National Bank (SNB) has mentioned repeatedly that they are committed to keeping the value of their currency in check. They are determined to defend 1.2000 and EUR/CHF, which I think has an indirect effect on USD/CHF.
The positive expectations on the U.S. existing home sales report could also help my trade. It is slated to print 4.66 million, higher than the previous month’s 4.61 million.
To recap, here’s my game plan: