It’s rare that we get to see Elliot wave theory played out so perfectly in the markets, so I had no choice but to make this pair my “Pick of the Day” when I saw it. As you can see on the chart, the US dollar has been making steady gains against the Swiss Franc. At the beginning of the trend we see moderate price appreciation, and by wave 3 we see traders jumping long into the like crazy after the dip. At the top of the trend, we have weak movement to the upside and a subtle double top. Now, it seems the pair is in corrective mode and it looks like the 3rd wave is already forming. I’m going to try to catch the rest of the wave 3 correction, and hopefully, the US Trade Balance report (8:30 am EST) can give us a little push to profitability. Since the value per pip is a little less on this pair than say the GBP/USD or EUR/USD, we can afford a wider stop than usual, but still pretty tight. Of course, if the US Trade Balance comes out with a lower than expected deficit number, we’ll have a trade prepared for that as well.
- Long USD/CHF at 1.2470, stop at 1.2450, pt1 at 1.2490, pt2 at 1.2540
- Short USD/CHF at 1.2420 stop at 1.2450, pt1 at 1.2400, pt2 at 1.2350
By the way, I’ve been getting a lot of email questions about brokers, so I decided to write a little blog on how to choose your own broker. Please visit http://pipcrawler.blogspot.com to check it out!