Broken Support Area on USD/CHF? – Trade Closed

Trade Closed: 2012-11-02 16:11 ET

Good afternoon! USD/CHF did make its way back up to the previous area of interest and found resistance, but unfortunately risk aversion turned things around ahead of today’s NFP.

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.20121030.review.png

This trade was looking good for a hot second as we can see the pair did find sellers on a retest of that .9340 level and dropped below the .9300 handle. But traders quickly changed their tune on the Greenback in Friday’s trading session as they priced in a better-than-expected US jobs number (171K vs. 125K forecast), which turned out to be the right call. We also got data on weaker euro zone manufacturing for October spark a bit of risk aversion sentiment, also positive for the Greenback.

After seeing the break above my entry level during the European trading session, and with the US Non-Farm Payrolls looming ahead, I decided to close my trade manually (.9373) beforehand to avoid event risk.

Total: -33 pips/ -0.44% loss

So, another trade that was in the black, albeit not by much, but then turned against me. That doesn’t really bother me psychologically because that’s just how the market goes sometimes, but I think given the uncertainty of the current environment I should adjust how I take my profits. I haven’t decided on what that would be, so I’ve got a lot to think about over the weekend.

Overall, I still feel it was a good setup and that I played it right to close my position ahead of the NFP report. I’ll probably just have close down trades much earlier ahead of big events.

That’s it and it’s time to hit the weekend for some rest and further reflection. Thanks for checking out my blog and have a great weekend!

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Trade Idea: 2012-10-30 14:59 ET

Good afternoon Forex friends! I’ve spotted a technical setup on USD/CHF that looks pretty enticing for short-term swing play. Is the broken trendline area now resistance?

pcpod.20121030.png

I’ve got the one hour chart of USD/CHF above, and we can see the pair has been making higher “lows” since bottoming out mid-October around .9220. It looks like that pattern may be broken and buyers have lost control as the pair breaks the rising trendline and an area of previous strong interest (.9340).

So, if the pair retests that broken area of interest, I look to short the market for a swing play. My stop will be a bit above the recent swing highs around .9380, and I will target the area around the minor psychological level of .9250, where we saw buying support a couple of weeks ago. Here’s what I am going to do:

Short USD/CHF at .9340, stop at .9415, profit target at .9265

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

This trade structure gives me a potential return-on-risk of 1:1, which I think is reasonable given the current environment of uncertainty. Of course, this week is filled many potentially market-moving events (including US Non-Farm Payrolls), so if sentiment does shift back into the favor of USD/CHF bulls, I’ll be sure to adjust quickly. Stay tuned by following me on Twitter and Facebook for updates and adjustments.

Thanks for checking out my blog…good luck and good trading!

  • Säm Royälty Käränjä

    worked out perfectly