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Forex Trade Idea: 2014-06-24

Spotted this simple forex setup on a pair that has been steadily climbing since bottoming out in March.  Is that a breakout or fakeout on CAD/CHF?

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

CAD/CHF 4 Hour Forex Chart
CAD/CHF 4 Hour Forex Chart

As I wait patiently for my NZD/CHF and EUR/USD trades to trigger, this recent break looks like a great opportunity to set up for.  In the four hour chart above, we can see that CAD/CHF is currently in an uptrend, recently breaking the strong resistance around the .8300 handle.  Is it a breakout or fakeout? Of course, no one knows until we know, but I think with a lot of Canadian data recently taking a turn for the positive (retail sales and CPI) the rally has a good chance of continuing.

And on the other side of the coin, we’ve got the Swiss Franc that has been in sell mode ever since hints of a ECB rate cut hit currency trader’s screens.  That move may be a bit overdone for now with the SNB recently confirming that the EUR/CHF floor will stay at 1.2000, but I think the thought of the floor being move will continue to lurk in the shadows of trader’s minds.

With all of that said, I look to hop on long on a pullback to the major psychological level that just broke.  My stop will be my usual weekly ATR framework, but I won’t hesitate to close on a break of that rising trendline if the upcoming Canadian data supports Loonie weakness.  My target is the next potential major resistance level, which held as resistance back in January.  Here’s what I am doing:

Long CAD/CHF full position at .8300, stop at .8170, max profit target at .8500

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 1.00% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.53:1.  Since it’s the summer and volatility has been slowing down, I expect to be in this one for a while if triggered.  Of course, anything can happen in the forex markets, and there’s still plenty of Canadian data for the rest of June to dish out surprises here and there.  Stay tuned by following me on Twitter and Facebook!


This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.