Break and Retest Play on USD/CHF – Trade Closed

Trade Closed: 2013-06-04 22:00 ET

Good evening forex friends! Here’s a quick review on grabbing a few pips on USD/CHF!

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

pcpod.20130604.review.png

For my review, I zoomed into the 15 minute chart as we didn’t get big action in today’s markets. The broken previous week support at .9510 held as resistance when retested and drifted lower during the early morning European session, and before we got the US Trade Balance numbers at 8:30 am ET, I decided to close the trade to avoid event risk. I manually closed at .9471 to lock in the profits.

+39 pips/+0.26% gain

Since there wasn’t much movement in the pair, I don’t think there was much more I could have done to maximize the profit on this trade, and it doesn’t make sense to hold onto it either as we head into big event risk with US jobs data coming in for the rest of the week. Overall, it was a pretty straightforward trade.

Well, the week is not yet done and there’s plenty of top tier events to push the market around. Stay tuned for new ideas and market observations by following me on Twitter and Facebook!

Thanks for checking out my blog!

Trade Idea: 2013-06-03 19:33 ET

Good morning to my Asia session peeps! Today, we’re seeing some USD weakness take hold after a not-so-good US ISM manufacturing PMI number. Will the sentiment continue as Asia gets to price it in?

pcpod.20130603.png

US Manufacturing PMI came in at 49.0 vs. the 50.7 forecast on Monday, prompting a pretty big move in the US Dollar. This could be the catalyst for short-term bearish sentiment for the Greenback (US economic data has more weight now on sentiment as the markets wonder whether or not we’ll see the Fed “taper”), so I’d like to play it as a 1 or 2 day trade.

Typically, there are two ways to play a breakout, which is to jump straight into the breakout, or to wait for a retest of the broken support/resistance level. For this trade, I look for a retest of the broken low around .9510 to jump in short for a day trade; since I just took a loss, I’m looking to be more conservative. I’m giving this trade ample wiggle room with a stop of about 2/3 of its daily average true range and I’ll target Monday’s lows with only half of my usual risk. Here’s what I am going to do:

Short half position USD/CHF at .9510, stop at .9585, profit target at .9415.

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.26:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!