Support Break on USD/CHF? – Trade Closed

Trade Closed: 2013-04-15 5:19 ET

Good morning forex friends! There wasn’t much of a break last week for USD/CHF as the pair hung around the .9300 area, despite more weak data from the US. With the start of a new week, and some really bad Chinese GDP data to kick it off, I closed my trade and moved on.

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.20130410.review.png

Well, I got the data I was looking for as US retail sales disappointed at the end of last week (-0.4% vs. 0.0% forecast), pushing the Greenback down to close the week. Unfortunately, last week’s weak US data wasn’t enough to make a sustained down side break in USD/CHF, and with this week opening up with some unexpectedly back Chinese data (GDP 7.7% VS. 8.0% forecast) to spark risk aversion into the US Dollar, I decided to close my open USD/CHF short at market (.9295) for a very small gain.

Total: +9 pips/ +0.055% gain

It was barely a tick up on my account, but I feel like it was the right move as the weakness in China may shift the markets in favor for something more stable like US assets. Plus, this week is filled with quite a few tier 1 events, which I think will spark some short-term opportunities, so why be locked down to one that ain’t moving? I’m sure USD/CHF will make a decision sometime soon, and that’s when I’ll be back in.

Anyways, I’ve got my eye on the British Pound, the euro and the Canadian Dollar this week, so stay tuned for my market observations and thoughts by following me on Twitter and Facebook. Good luck and good trading!

Trade Idea: 2013-04-10 4:17 ET

Good morning forex friends! The weak US jobs report from Friday has this trader a bit bearish on the Greenback. USD/CHF looks like a good way to play my bias as I watch a minor support area break.

pcpod.20130410.png

My friend Forex Gump reviewed the March US jobs numbers and the data wasn’t pretty to say the least. Not only did the net number of jobs added disappoint (88K jobs were added versus the forecast of 198K) but the participation rate also fell from 63.5% to 63.3% as 500K Americans dropped out of the labor force. This is a pretty big blow to the recent positive data we’ve been seeing from the US, and I think it’ll only be the beginning as sequestration begins. The tendency is when the jobs start to go, so does the rest of the economy.

The US Dollar sell off after the jobs report indicates the currency is moving in positive correlation with the economic data, so I’m bearish on the Greenback for now and I’ll play this bias through USD/CHF.

On the 240m chart of USD/CHF above, we can see the pair coming back down after topping out in the .9500 area thanks to . It looks like it is now breaking minor support just above .9300, with no major areas of support until .9100. I’ll be shorting here at market with a stop just above the most recent area of consolidation. Here’s what I am going to do:

Short half position USD/CHF at market (.9304), stop at .9380, max profit target at .9100

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

I’m only going to risk 0.50% of my account, and with this trade structure, my potential return-on-risk of 2.68:1. Of course, I’ll look to add to my position if it goes my way, and if the story changes then I’ll adjust my position quickly. Stay tuned to my market thoughts and adjustments by following me on Twitter and Facebook.