USD/CHF: Ripe for a Pullback?

Trade Idea: 2013-8-8 3:05 am ET

It’s been a long time coming and here’s my trade for the week. I’m lookin’ at this sexy setup on USD/CHF!

USD/CHF Chart

I know, I know. I featured two different pairs in my Pre-Week Market Analysis. But my trade idea on USD/JPY has already been invalidated and I just like the setup on USD/CHF better than EUR/USD. So what exactly am I looking at?

On the hourly timeframe, we see that the pair strongly made a new low to extend its downtrend. I plan on jumping in on the rally but I’ll wait for price to pull back to around .9270. As you can see, the 38.2% Fibonacci level and SMAs coincide nicely around this area where the pair also previously found support and resistance.

Fundamentally, there’s a lot of dollar weakness going around as the possibility of tapering took a major hit. The most recent U.S. employment report came in significantly worse than expected, causing market participants to speculate that tapering isn’t a sure thing. In addition, we’ve been seeing a lot of good data not only out of Switzerland, but out of other European nations. This includes the U.K.

To recap, based on my technical and fundamental view, I’ve decided to put a short order on USD/CHF. Here’s what I’m going to do:

Short USD/CHF at .9270. Stop loss at .9340. PT1 at .9200. PT2 yet to be determined. Risk disclosure.

XOXO,

Huck

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