Playing the GBP/CHF Uptrend

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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GBP/CHF 4 Hour Forex Chart

GBP/CHF 4 Hour Forex Chart

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

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

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!

  • ForExchange

    Hi Pipcrawler,

    the GBP rally was stopped last week. Is your long term view still very bullish on the GBP?

    • Pipcrawler

      Hey ForExchange, the rally did stop, but how many times did it stop, pullback and resume in the last 3 months? A lot. Of course, this time could be different and we won’t know until down the road. That’s why I focus on probabilities, and with the uptrend and fundamental arguments still intact, the probability is more in favor of an up move than down. I’m not super bullish and given recent volatility, I think it’ll reach my exit levels within a week or so, given we don’t see any big surprises from this week’s UK data or geopolitical news. I hope this helps!

      • ForExchange

        Hi Pipcrawler!

        Thanks for the fast and good answer! Good luck to you!