Trade Idea: USD/CHF Triangle Breakout Correction

With the Fed likely to stay on track towards hiking interest rates before the end of the year, I’m looking to buy the Greenback on dips. Here’s what I’m seeing on USD/CHF.

USD/CHF Trade Setup

This pair just recently broke above its symmetrical triangle pattern visible on the 4-hour time frame. Price found resistance around the .9900 mark before showing signs of a correction so I pulled up the Fibs on the latest swing high and low.

The 38.2% retracement level coincides with the broken triangle resistance and the .9800 major psychological mark, which might hold as support moving forward. Stochastic is still on the move down to show that sellers are on top of their game right now, but the oscillator is already dipping into the oversold region to show that buyers could regain control soon.

USD/CHF 4-hour Forex Chart

USD/CHF 4-hour Forex Chart

I’m eyeing a potential pullback entry around .9775-.9800, but I haven’t set any entry orders yet since I plan on waiting for the U.S. retail sales and PPI numbers to be released in the upcoming U.S. session. Analysts are counting on a rebound in consumer spending and producer prices, and these could allow USD/CHF to resume the rally on a shallow retracement.

If so, I’ll be ready to hop in at market with a small position and likely add on a move past the .9900 mark. Big Pippin did show that the pair is also moving above a short-term rising trend line, with support around .9850. But if U.S. reports miss expectations, I’ll set up for a much larger pullback, possibly until the .9750 area or 61.8% Fib. Fed Chairperson Yellen still has a testimony scheduled much later in the day anyway, so USD price action could get a little more exciting by then.

I plan on setting my stop below the swing low to give this trade room to breathe and I’ll be aiming for around 500 pips as my target, which is roughly the same height as the triangle formation.

As always, 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 simply follow what I do.

Risk Disclosure
Pipcrawler’s Q2 2016 Blog Trading Performance

These are some of our favorite trading books, and BabyPips.com receives a small credit from any purchases through the Amazon links above to help support the free content and features of our site…enjoy!