Jumping On the USD/CHF Uptrend – Trade Closed

Trade Closed: 2012-08-02 23:30 ET

Good evening forex fans! After sitting on my position for a few days, it looks like it worked out well thanks to the two most powerful figures in the markets holding back from taking action this week.

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

PCDPOD20120730.review.png

The two main events of the week was whether or not the FOMC and the ECB would take further action to support both of their weakening economies. And as we can see from the chart above, the support area marked at the beginning of the week on USD/CHF held like a champ (even with the initial weak USD reaction to Draghi) and was the perfect area to take on long Dollar positions after no policy changes from both central banks.

My second position was triggered during the ECB press conference and after rallying over +100 pips from the bottom (along with the end of the Euro session approaching) I decided to close out at market (.9833) and call it a day.

1st half: +40 pips
2nd half: +133 pips
Total: +86.5 pips/ +0.865% gain

In retrospect, I felt like I did a good job holding my position open into both events, which I usually don’t do with major events. But I felt so strongly that neither central bank would make a move, I held on. And out of pure luck, I was right.

What I could have done better was to have been more patient with my exit. At the time of my close, the Euro session was coming close to an end and I felt we may see a pull back on profit taking. Also, .9850 was showing strong intraday resistance, so since I caught most of the move I figure I wouldn’t push my luck and just take the profits. After a bit of reflection, a better move would have been to close half and let the other half ride since both central banks not making a move may push traders into Dollar bullish mode into the next week.

Overall, I’m happy with this trade and the fact that I did alright with my analysis. Oh, and the profit is cool too :)

That’s it for me this week as I think I’ll stay away from Non-Farm Payrolls tomorrow. Thanks for checking out my blog everyone and I hope you all had a profitable week as well. Have a great weekend and see ya next week!

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Trade Idea: 2012-07-30 5:23 ET

Good morning forex fiends and welcome to a new week of trading! For this round, I’m playing a simple technical setup on USD/CHF. Will the trend be my friend this week?

PCDPOD20120730.png

I have the 60 minute chart of USD/CHF above and we can see the pair testing an area of strong buying interest over the past couple of weeks. Given that the pair has been on a longer term uptrend, and especially after breaking out higher from the first quarter consolidation, the Dollar bulls still seem to be in control. Building a swing long position here creates a favorable potential reward-to-risk ratio if I go for the strong resistance level marked on the chart, so I’ll scale right into it now. Here’s what I am going to do:

Long half position USD/CHF at market .9793, stop at .9650, profit target at .9950

Long half position USD/CHF at .9700, stop at .9650, profit target at .9950

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

This trade structure gives me a potential reward-to-risk of a little over 2:1 if both positions are entered. Now, the target is a bit out of the average weekly volatility range, but we’ve got a cornucopia of major catalysts this week, most notably the FOMC monetary policy decisions and the US Non-Farm Payrolls report. I’m still in the camp that we won’t see QE3 from the FOMC (which is USD positive for now), but of course, if they do change policy then I gotta change my trade. As always, stay tuned for market observations and trade adjustments by following me on Twitter and Facebook.

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

6 comments

  1. saintpip

    Have you any strong reason going long on USDCHF rather than shorting EURUSD? BTW, your decision to exit early looks better this morning with USDCHF dipping back below 0.9800!

    Reply
    • Pipcrawlerpipcrawler Post author

      If it’s general risk sentiment trading, I do like a long USD/CHF vs. short EUR/USD because of the slight interest rate differential advantage of the USD over CHF.  Also, the SNB is known to be on the ready to keep the Swiss franc from appreciating too much.  If it’s European specific events, then I’ll prefer trading EUR/USD over  USD/CHF.  I hope this helps!

      Reply
  2. Mostwantedpip

    First of all wanted to thank every one behind babypip… it’s awesome. I did have a question, the stochastic indector that i noticed many of you using what sort of settings do need to input in order to configure it correctly? 

    Reply
    • Pipcrawlerpipcrawler Post author

      Thanks!  Our goal is to do our best to instill good trading principles and practices so that you can help yourself become a better trader!

      For my stochastics, I use (14,3,3).  I hope this helps.  Thanks for checking out my blog!

      Reply
  3. alwjmonster

    wow, you must having some huge guts to still holding your 2nd position untill tiggered.. if i were you, i would have closed 2nd position when i see market reacted extremely bullish during the ECB conference and just to find up it ends up rally.

    Reply
    • Pipcrawlerpipcrawler Post author

      No guts over here buddy!  I’m probably just as nervous as every other trader out there.  But doing the homework (reviewing past release price action, understanding the current environment & market expectations) and having a solid plan to limit risk does make holding on a lot easier.  :)

      Reply

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