Going Long USD/CHF on Greenback Strength – No Trade

No Trade: 2012-05-14 23:48 ET

Good evening! Luckily for Dollar bulls, it was all about buying in Monday’s session for USD/CHF. With the pair on its way higher and a new session in the works, I’ve decided to make some adjustments and look for new opportunities.

Before you move on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.

PCDPOD20120514.review.png

On the 15 minute chart review above, we can see that risk aversion flows into US assets continued on the Greek fears mentioned earlier. There were no events during the US session to possibly reel in the fear, so traders were all about the Greenback. With the probability of this trade idea being triggered slowly creeping away, I’ve decided to close out my open orders to go long USD/CHF and look for new opportunities. No trade.

What could I have done differently? Probably the only thing would be to go long at market on that break of the Asia session range. It was a valid trade signal, but I let my bias to “always get in at a good price” keep me from taking a good trade. To make me feel better, I could say that it wouldn’t have produced much of a win, but then again, a win is a win, right? I’ll have to entertain the idea of going in at market more often in the future.

The week is still early and there’s more trading left to do. Since the current risk-off trends are still intact, I will continue to find Dollar bullish setups. We do have plenty of mid and major tier data coming up on the forex calendar today, mostly in Europe, so I may look into a euro setup very soon. Stay tuned by following me on Twitter and Facebook, and thanks for checking out my blog!

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Trade Idea: 2012-05-14 05:15 ET

Good morning forex friends! I’m starting off my trading week with an idea to ride the recent strength in the US Dollar. Will risk aversion continue to push traders into the Greenback this week?

PCDPOD20120514.png

In the 15m chart above, it’s pretty clear to see that USD/CHF has been rolling higher as the US Dollar has benefited from the return to risk aversion in the last week or so. Forex Gump layed out why we may have more reasons to see risk-off flows in his recent article, “3 More Risks That Could Worsen Market Sentiment,” but it’s the continued Greek political deadlock and potential departure from the euro that has traders worried at the moment.

Weak Swiss and European data was just released on the forex calendar, as well as a weak Spanish bond auction earlier today. It’s not looking good at the moment to put risk back on, so I’l be in favor of the Greenback in today’s session.

Now, going back to the chart above, it looks like stochastic is indicating overbought conditions, so I will jump into USD/CHF long on a pullback to the day open/previous week high just above .9300. My stop will be below Friday’s low and my profit target will be just below the next major psychological level of .9400. Here’s what I am going to do:

Long USD/CHF at .9310, stop at .9250, profit target at .9390

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Risk Disclosure.

This trade setup gives me around a 1.3:1 potential return-on-risk, and because it is a short-term trade, I’m only risking 0.50% of my account on it.

Of course, with so many different issues around the globe, sentiment can shift on a dime. Be sure to follow me on Twitter and Facebook for updates and adjustments in case we see a sentiment change.

  • Peter

    Mh, the 1d chart does not make me want to go long, honestly…

    • pipcrawler

      I looked at the daily as well, and I see higher lows telling me buyers are in control.  Now, the .9500 to .9600 does look interesting for possible resistance and maybe reversal if sentiment changes.  What do you see Peter?

      • Joker

        Oh, and I forgot to mention the 61,8% fib lvl passing through .9320 (drawing from the tops of mid january to the bottom of 02/29)… But hey, the market is always right, so I must be wrong :D

      • Peter

        At the time you posted i saw a very strong resistance area around 0.9250 / 0.9300 area… tested on 10/07, 11/27, 02/15, 03/15, 04/16. I would have said that had to be a very sensitive level, and I was fearing a false breakout, but seems like the pair passed it like a knife through butter… so i guess I was wrong, LOL.
        Anyway, it could still be interesting if we ever see a retracement.

  • ML

    Peter, you sure USDCHF will move down? If so, what do you think is the resistance level of USDCHF?

  • ML

    Pick of the Day – > Is your recommended trade still valid? Your trade is not triggered in the first place.