Pick of the Day: USD/CHF – Close position

Close Position: 2007-07-06 00:00

We will close our open position in USD/CHF and we will not enter any new trade orders ahead of the Non-Farm Payrolls report which is due out at 8:30 am EDT later today. The ADP Non-Farm Payrolls data has been a pretty accurate leading indicator in recent months, and today’s number of 150K shows a potentially strong number from the government later.

Of course, the headline number is not the only thing to watch. Traders should be aware of revisions to previous month’s data as any significant change could change the the market’s mood in USD.

With the housing market down in the dumps, Dollar bulls are relying on tomorrow’s report to spark further buying in the Greenback and the further disregard any rate cut potential from the Fed. Now, if we do see a weaker than expected headline, or revisions downward, we should see the Euro and Pound continue the longer term rallies against the Greenback.

Tomorrow’s report is going to be crucial for Dollar sentiment, so we will avoid the potentially dangerous volatility ahead and look for trading opportunities after the report.

Close remain position at market (1.2180) and stay tuned for updates!

1st half: +15 pips
2nd half: +10 pips
Total: +25 pips

Adjust Trade: 2007-07-05 11:45

Our trade orders to sell USD/CHF at 1.2190 was triggered last night as the Dollar rallied through the US holiday. The pair has dropped from our entry point, but with ISM Services data better than expected, USD may continue to rall and I’ve decided to adjust my exit strategy.

Close half position at market (1.2175) to lock in a small profit and adjust stops on remaining position to breakeven.

Good luck!

Trade Idea: 2007-07-03 00:17

PoD Chart

Welcome to another wonderful day of Forex trading! Today we will focus on the USD/CHF and the recent rally the Swissy has had against the Dollar.

We’re currently seeing risk aversion in the markets after a terrorist attack in the UK and as the subprime mortgage fallout continues to push investors away from riskier assets. The Swissy has rallied as carry trades unwind, but also on the expectations we will see another rate hike from the SNB. But is the move over and will we see a reversal in the Dollar’s fortunes? Probably not quite yet.

We are expecting US Pending Home Sales and Factory Orders later today, but after weaker Durable Goods and housing data, the market will expect more weakness today. Also, with the US holiday coming up, we may see light volume and a continuation of the Dollar selloff.

On the chart, we do see the sell off from the 240 MA’s, and it looks like the pair is taking a breather around 1.2100. If the trend continues lower and we see a break of that level, I expect momentum to pick up again as I see traders placing more sell orders to liquidate the short Swissy positions. Of course, any retracement on the recent move should be a great opportunity to jump back in the downtrend. Here are a couple of trading ideas:

Short USD/CHF at 1.2190, stop at 1.2240, pt1 at 1.2150, pt2 at 1.2100

or

Short USD/CHF at 1.2080, stop at 1.2130, pt1 at 1.2035, pt2 at 1.2000

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

Good luck and good trading!