There’s a simple, short-term trend higher on USD/CHF, so why not hop onto it? Will other forex traders see the trend and provide support?
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USD/CHF has actually been trending for a while, steadily climbing since bottoming out around .9150 in late June. I haven’t been paying much attention to the Greenback lately because of the Fed rate hike uncertainty, but with the latest NFP report behind us, I think it’s safe to take a dip for a short-to-mid term swing trade.
Fundamentally, the Greenback is supported by the idea of a potential rate hike by the FOMC in by the end of the year, and while the Swissy could jump with the euro on positive Greek news, I think the need for the Swiss National Bank to keep the franc from rising too fast will help keep it down.
So, I’m looking to go long with a swing trade, but with a heavy calendar for the U.S. coming up, I’m going to play it safe by waiting for a pullback before hopping in long on the U.S. dollar. On, the one-hour chart above, we can see the pair dipping into the moving averages, which may act as dynamic support and draw in more buyers. I’m looking to go long on a retest of the 200 MA area, likely slightly below it because of the active forex calendar. Here’s what I’m doing:
Long quarter position USD/CHF at .9700, max stop at .9550, profit target at .9900
I’m only risking 0.25% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.33:1. 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!