Forex Trade Idea: 2014-07-21
GBP/CHF has been in a textbook uptrend since March, with every pullback an opportunity to play the trend higher. Is the slight pullback we’re seeing a similar opportunity?
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The four hour chart above is just a snapshot of the stair-like ascent of GBP/CHF over the past 3 to 4 months. With the U.K. still looking like one of the few major economies to legitimately be on the road to recovery–as well as entertaining rate hike speculation–I still see this uptrend as something to play, but cautiously as the recent rallies and pullbacks are looking shallower each time.
Because this week’s forex calendar is packed with tier one U.K. economic events, I’m looking to play this cautiously. It’s a good probability that we’ll see data that continues to support Sterling for now, but just to be safe I’m going with a wide stop and an entry on a slight pullback to the confluence of Fibs, rising trendline and potential shift of resistance level to support at the major psychological level. Here’s what I am doing:
Long full position GBP/CHF at 1.5300, stop at 1.5140, initial target at 1.5500
I’m only risking 1.00% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.25:1. 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!