Support to Hold on USD/CHF? – No Trade

Close Open Orders: 2012-07-05 07:08 ET

Good morning! It’s another case of the missed trade as USD/CHF pulled back only slightly before moving higher on recent Dollar strength. With major events coming quickly, it’s time to avoid event risk.

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

PCDPOD20120703.review.png

Looking at the chart above, it looks like USD/CHF is already closing in on my profit target, and with the weekend and major events about to hit the wires (the MPC just announced another 50B GBP to its QE program), it’s time to close my open orders to buy USD/CHF and move on to another trade opportunity. No trade.

Overall, I’m pretty happy with everything and I think it was the right choice to look for a pullback given the optimism on risk at the beginning of the week. It was just unfortunate that USD/CHF only dipped to about .9512 before buyers jumped in–missed by a measly 12 pips!

That may be it for me today, but I may have a day trade idea for the Non-Farm Payrolls report tomorrow. If I do, I’ll be sure to put my thoughts out there, so stay tuned by following me on Twitter and Facebook to see what I’m thinking. Thanks for checking out my blog…good luck and good trading!

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Trade Idea: 2012-07-03 04:19 ET

Good morning forex friends! Now that I have that rough second quarter behind me, I’m ready to rock out the rest of 2012! USD/CHF has to potential to get it started right on a potential retest of a major psychological level. If retested, will it hold?

pcdpod20120703.jpg

Fundamentally, I’m still long US Dollar biased for a few reasons:

  1. I still believe we’ll see risk-off moves thanks to the EU debt crisis. Like my man Forex Gump, I think the risk-on sentiment after the EU Summit may not last.
  2. Recent weak PMI from around the globe may also put pressure on risk-on traders. We saw weak PMI from pretty much EVERYWHERE, even the US, indicating global growth slowdown. This does add on more fuel to the fire for QE3 (the Dollar killer), but I’ll hold off on buying into that thought until Ben says it himself.
  3. It’s summer time and I think pairs will range without a huge catalyst. Without something like a highly anticipated QE3 megabomb, it’s likely we’ll see low volatility conditions play out as uncertainty continues to reign and traders take a holiday from the market madness. .9500 – .9700 looks to be the established range to play for now.

So, the positive risk-on sentiment from this weekend’s EU summit may carry USD/CHF to .9500, and I think it’s there we may see USD bulls jump back in. In case it pushes it further, I’ll be scaling into a long position with .9450 as my average entry price. My stop will be below this week’s ATR range, and my target will be just under the June high. Here’s what I am going to do:

Long half position USD/CHF at .9500, stop at .9350, pt at .9650

Long half position USD/CHF at .9400, stop at .9350, pt at .9650

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

If both positions are entered, this trade structure gives me a potential return-on-risk of 2:1. Also, this will most likely be a medium term play for me, so I’ll hold into the weekends if the trade still makes sense. Of course, anything can happen in the markets and if sentiment shifts or my trade is fundamentally invalidated, I’ll quickly adjust. Be sure to follow me on Twitter and Facebook for updates, adjustments, and my ridiculously random market comments.

Thanks for checking out my blog. Good luck and good trading!

  • Francis

    I just actually went long @ .9500 then took two partial TPs already. What a profitable 3 trading days for me. Now I don’t know where the pullback will be or if it will reach that June high already. Still have my last remaining position from .9500 and target is at June high.

    • pipcrawler

      Nice job catching the rise.  We can never know where a market will go exactly–there are only probabilities, so focus on managing risk accordingly.  Good luck!

      • Francis

         Yep risk management is the key. Now it’s just 4pips away from .9650! haha.

        • pipcrawler

          Yeah, USD/CHF definitely rocketed higher after the ECB interest rate cut… doh! 

  • Kores

    I would love to see Usd falling till 0.947, than it could go long.

  • rashad Sumpter

    I’m working off a 4h chart using ichimoku. I was planning on shorting the pair .9524 to .9450 based on a bearish Tenkan sen/ Kijun sen cross. I thought now was a good entry point given senkou B is showing a flat bottom and there is a close below the kumo cloud at 13:00 today. I don’t want to carry this into the weekend but given we’v come to a similar conclusion, what do you think about my setup?

    • pipcrawler

      Hey Rashad.  To be honest, I didn’t really spend much time studying or practicing ichimoku setups, so I can’t be of much help to ya.  Because there are so many different ways to trade, I would just say that if you’re well practiced with your tested methods (and I’m talking about at least 100 trades or at least a year of practicing your method), then go with what your experience tells ya. 

      As always, the worst case scenario if you practice solid risk management, is that you lose a small percentage of your account–the only real thing we can control in trading! 

      Sorry I couldn’t be much more help Rashad.  Good luck and good trading.