USD/CHF Downtrend to Resume? – Open Orders Closed

Open Orders Closed: 2011-07-22 00:37 ET

No trade for me this week as my short orders at the 61% Fib were narrowly missed–by 1 pip! With the market already dropping 100+ pips and the week coming to close, it’s time to shut down and review.

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

PCDPOD20110719.review.png

As we can see in my chart review above, the pair did continue its retracement higher into the potential resistance area marked earlier this week. It seems the dollar bears were ready to pounce hard in this area as the market’s visit to the 61% Fib area was extremely brief before reversing back lower. It looks like the top maxed out around .8279; one pip from where I wanted to go short…doh!

With USD/CHF already on its way lower and with the end of the week quickly approaching, I have decided to close my open orders. No trade.

In retrospect, I could have adjusted by entering at the 50% Fib area after seeing how sellers took back control so quickly. Something to keep in mind if I see similar behavior in the future.

So, another missed trade and 2:1 profit, but at least I can say it wasn’t a loss, right? :)

That’s it for me this week as far as swing trades, but I’ll keep my eye out for opportunities to play eurozone and Canadian data coming later in the session. Stay tuned by following me on Twitter and Facebook for possible day trade ideas.

Good luck and have a great weekend!

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Trade Idea: 2011-07-19 9:39 ET

Got a nice technical setup forming on USD/CHF to jump in my weak Greenback bias. Will the Fibs be good to me with the Swissy?

PCDPOD20110719.png

With the strong sentiment for a weak Dollar on the US debt ceiling issue and general risk aversion pushing up the Swiss Franc, I like this current retracement on USD/CHF as an opportunity to go short.

On the one hour chart above, the pair has been rallying ever since making a double bottom around the .8100 handle. I don’t see much reason for the US Dollar to rally at the moment, so I think this retracement is temporary. There is a divergence signal at a potential minor support-turned-resistance level that lines up with the 61% Fib around .8280. This area is also well beyond the normal weekly volatility range (increasing the chance of reversal), so I will look to short there if it is retested.

Since I’ll be going in at the 61% Fib, and because of the lack of foreseeable major catalysts this week on the forex calendar (I don’t think Bernanke will have the same effect on the market as he did last week), I’ll use a tight stop of 1/4 the weekly average true range. My target will be the current week low just under the .8100 handle. Here’s what I am going to do:

Short USD/CHF at .8280, stop at .8335, pt at .8090

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

This trade structure gives me a potential return-on-risk of over 3:1, and potentially more if I scale into a winning position. Of course, I’ll adjust my actions according to changes in the market, so stay tuned by following me on Twitter and Facebook for updates! Good luck!

  • Maxiv

    Ok… ive gone with this….all set.

  • Canarywharf

    Had my entry set slightly lower at around 0.8250 but the price has just blown through that.  Currently at 0.8265 so entry at 0.8280 looks promising.

  • FX Rocket

    Why Short?

    Swissy is ready for uptrend.

    The prices are convergence with Money flow Index.

    • pipcrawler

      Sorry @62a6ce423a7fff99e400610accbafe00:disqus I don’t normally follow the Money Flow Index, but the reason for going short was in the analysis above. Hope it helps!

  • pipcrawler

    Thanks for the comments guys.  I didn’t get triggered on my orders as it looks like .8279 was the high read–1 pip!  Let’s see how the rest of the week goes… I may alter my entry if the USD rally holds in this area… stay tuned!