Is the Downtrend still in Play for USDCHF? – Close Open Orders

Close Open Orders: 2010-10-01 10:10 am ET

PoD Chart

Good morning! It looks like USDCHF didn’t get the pullback I hoped for to jump in the Dollar downtrend. Instead, the pair pivoted around the support area formed around the previous swing low.

USD selling sentiment is still strong on potential Fed QE actions, but we did get positive reports from the US (including upticks in GDP, Initial Claims, and housing prices) to limit the downtrends. In effect, a pretty rangebound weekend for USDCHF.

As we quickly approach the weekend, I have decided to close down my open orders to avoid event risk. No trade.

Pretty tricky environment we are still in and it won’t get any easier as we continue to wonder IF the Fed will pull another round of QE. We also have the upcoming election season in the US to further that uncertainty on regulations and taxes, and earnings season for US corporations may bring volatility to global risk sentiment…should be a wild fourth quarter!

Well, it’s time to roll out and enjoy the weekend. I hope you enjoy it as well. Remember, rest is just as important as the effort in growing your skills and abilities in any performance endeavor…even trading! Thanks for checking out my blog, stay tuned and have a great weekend!

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Trade Idea: 2010-09-27 7:11 pm ET

PoD Chart

Good evening fellow Forex fanatics! We’ve got a simple technical setup going on in USDCHF as the pair stalls during its current downtrend. Check it out!

I have the four hour chart up above and we can see the Greenback has been in a steady downtrend–actually it’s fallen from around 1.16 since June! So, the trend is strong, but the pair is now testing a major support area that last held in November 2009 and March 2008. Is the third time the charm for a break lower?

I think it may be, especially as the Fed opened up the possibility of further QE to stimulate the slowing recovery and fight deflation. Traders are taking this rhetoric as a license to sell Dollars like gangbusters and while the pair is consolidating at the moment, any pullback could be taken as an opportunity to jump back in the Dollar selling party. Is the trend still our friend?

I think a pullback means a good chance for traders to jump into the trend lower at a better price, so I have decided to start selling at the Fibonacci retracement levels drawn on the chart. Not knowing if and where it may turn, I have decided to short at the 38% and 61% Fib levels and my stop will be 107 pips (daily average true range) away from the average price of .9982. I will target the previous low and beyond.

Short half position at .9935, stop at 1.0090, pt at .9630

Short half position at 1.0030, stop at 1.0090, pt at .9630

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

Plenty of data this week on the Forex Calendar to spark some volatility, most notably the Final US GDP report set to be released 12:30 pm GMT and ISM Manufacturing Survey this Friday at 2:00 pm GMT. If these bad boy events come in weaker than expected, we may get more Greenback selling. Swiss Retail Sales is also on tap this Friday at 7:15 am GMT and it may bring on short term Swissy selling if weaker expectations come inline.

Should be an interesting week for the both the Greenback and the Swiss Franc. Stay alert and stay tuned!