Closed my USD/CHF long early as the technical setup for a long position is invalidated with the recent shift in sentiment. Here’s a quick forex trade review.
Original Trade Idea: Short-term Trend Higher in USD/CHF?
Volatility has increased and market biases have shifted in the last week thanks to various factors (oil plunge, Russian rouble collapse, weakening Chinese data, etc.), mostly bringing risk aversion sentiment back to the market. Specific to Swiss franc pairs, the lack of action by the SNB to combat a potential deflation scenario at last week’s monetary policy meeting had forex traders buying back short positions after the event.
All combined, USD/CHF has taken a decided turn to the downside with enough momentum to break the potential support area and stay lower. With the technical setup invalidated and fresh catalysts to keep pressure on the pair, I decided to close my trade down manually at .9588.
Total: -122 pips/ -0.69% loss
I really don’t have additional thoughts on this trade as it’s a textbook setup that just didn’t work out. When the market themes shift and you’re doing swing or short-term trades there’s really nothing more to do than a final assessment and/or close it all down.
For the rest of the week, I’m still watching the U.S. dollar but with the FOMC monetary policy decision coming tomorrow, I’ll wait to see what happens there before hopping on a new trade. Stay tuned!