Taking Another Swing at USD/CHF Long – No Trade

Close Open Orders: 2012-07-12 07:18 ET

Good morning! It looks like another shallow pullback thwarted my dreams of my first win of the quarter…Grrrr! With the FOMC statement come and gone, and the weekend quickly approaching, it’s time to make an adjustment to my account.

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

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The FOMC meeting minutes failed to give the markets what they wanted, a hint of more quantitative easing, which meant more US Dollar buying and no retracement for USD/CHF trade in the short-term. It’s been a steady march higher for the pair since the announcement, and with the weekend quickly approaching, it looks a low probability of my trade working out this week. So, I have decided to close my open orders to go long USD/CHF at .9710. No trade.

Boy, this “waiting for a retracement” technique has caused me to miss out on some pips this year! Since I’ve been generally right in direction, I’ve decided to only do market orders going forward and adjust my risk by going with wider stops and smaller positions. We’ll see how this goes with the next trade, and when that idea comes together, I’ll be sure to post it on Twitter and Facebook for you guys to check out.

Until then, good luck, good trading, and thanks for checking out my blog!

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Trade Idea: 2012-07-10 06:08 ET

Good morning forex friends! After missing a sweet move, like the USD/CHF rally from last week, it’s always tough to jump back in the mix. But that’s exactly what I’m gonna do. I made a couple of adjustments, so let’s now see if the market goes my way.

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

PCDPOD20120710.png

Fundamentally, the global picture is looking a bit squeamish. It’s bad enough that just last week that we saw monetary policy changes from two of the big players in the central bank world: the ECB and the BOE. The former slashed its overnight lending rate by 25 bps while the latter increased its asset purchase facility by 50B GBP (Read more here). We also saw a weak reading on Friday from the US Non-Farm Payrolls report, which upped the prospects of more stimulative type actions from the Federal Reserve. It’s getting so bad that even China is making monetary policy moves! So, it looks bullish for the “safe-haven” Greenback in the short-term.

Technically, it looks like the nice run from about .9500 to .9800 has topped out; that’s a 300 pip move which is nearly twice its weekly ATR. That’s an outsized move, so I think we’ll see a pullback as traders lighten up on Dollar longs ahead of this week’s FOMC meeting. And since that event is only a couple days away, I think we’ll probably see a shallow pullback before traders buy back into USD safety as the fundamental outlook still looks dim. Those broken resistance area could be potential support levels, so that’s where I will jump in. Here’s what I am going to do:

Long USD/CHF at .9710, stop at .9615, profit target at .9900

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 2:1 potential return-on-risk, and after reviewing my Q2 trading performance, I may jump in at market if traders show buying support above .9710. To stay in the loop of my trade/order adjustments and market observations, be sure to follow me on Twitter and Facebook.

Thanks for reading my blog! Good luck and good trading!

  • Zorkii

    I think you can tackle the problem two ways. Depending on how much you time you got on a daily basis in front of the screens.

    1st way: Do as you mention, widen stop loss and scale down on your position.

    2nd way: If you got time, sit and w8 for when for Stochcastic crossover, like in your example above when the price retraced to quickly. Since you are in an uptrend and the stochastic did crossover but not quite at oversold levels, you have some edge to jump into the trade anyways.

    Reverse in a downtrend.

  • alwjmonster

    yea, couldn’t agree much of this, you should try being flexibility, waiting retracement for price to reach your order is sometimes very difficult.. happen not really often.

  • pipcrawler

    Thanks for the comments guys.  I didn’t get the retracement I wanted, but it looks like USD/CHF is making it’s way to parity.  I hope y’all got to catch some pips!

  • Biginsh

    Thank you

  • Joven

    Stop trading on “I hope this will work basis”. Learn how to trade properly like your betting your house each trade. 

    • Diletarra

      “young man” this is a technically and fundamentally a sound trade. We have been in a risk off environment for quite some time. And clearly it’s trending seems like good business to me.

      • Joven

        Sorry, I don’t make money trading technically or fundamentally. It’s all about mathematics.