Intraday Short on the USD/CHF Downtrend – Trade Closed

Trade Closed: 2013-06-14 16:06 ET

Good afternoon! USD/CHF did pull back higher to the broken support-turned-resistance, but volatility slowed down and the pair pretty much hung out for the rest of the week. Time to close out ahead of the weekend.

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

pcpod.20130613.review.png

The chart above says it all as the downtrend failed to follow through. This was probably due to better-than-expected US retail sales (0.6% vs. 0.4% forecast) and unemployment claims (334K vs. 346K forecast) balancing out supply and demand for the Greenback on Thursday. And today, we got mixed results from US economic data on the forex calendar, which didn’t have a big affect on sentiment.

With the weekend quickly approaching, I’ve decided to close out my position manually at .9221 for a negligible profit to avoid weekend risk.

Total: +4 pips/ +0.023% gain

I still like a short on this pair technically, so I may re-enter at the beginning of next week. But with the Fed meeting next week, I’ll have to reassess the possibility of holding onto any position ahead of that event.

In retrospect, it was a straightforward intra-week trend play, and the only thing I think I could have done differently was to maybe adjust my entry higher to he minor psychological level of .9250. But I think the broken support-turned-resistance was a good entry point, especially given that the pair had to pull back about 100 pips from the week’s lows in order to reach it. Overall, it was a simple setup and I don’t think I could have done differently.

With the crazy moves and central bank uncertainty, I think it’s a good idea to avoid weekend positions with short-term trades at the moment. I’ll take the weekend to review and adapt to these ever changing conditions, and hopefully be ready for the markets next week. Thanks for checking out my blog and have a great weekend!

Trade Idea: 2013-06-13 05:33 ET

Good morning forex friends! I’m going with a technical day trade on USD/CHF to play the recent broad US Dollar weakness. Will the trend continue?

pcpod.20130613.png

I’ve thrown up the one hour chart of USD/CHF, and we can see a clear trend lower this week on what seems to be risk-off sentiment, as well as the uncertainty of the US’s recovery and impending monetary policy decisions. Can the trend continue until the end of the week? I don’t know, but sentiment is clearly against the Greenback at the moment.

Because it’s been pretty much a straight grind lower this week so far, I do look for a retracement to jump in the down trend at a better price. If I do get into that trend, I believe today’s US retail sales report can be a catalyst. The last two releases have been negative, and another negative read or weaker-than-forecast read today could be a confirmation of real weakness, possibly pushing the Greenback down further. Of course, if I get in and the US retail sales report comes in better-than-expected, I’ve got my stop there set to just above the recent intra-week high to limit my losses to a very small amount. My target will be around the next major psychological level down. Here’s what I am going to do:

Short a quarter position USD/CHF at .9225, stop at .9310, profit target at .9110

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

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 1.35:1. 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!

Thanks for checking out my blog…good luck and good trading!