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The correction is still in play for this Loonie pair and I’m seeing a lot of confluence on this area of interest, so I’m setting my short entry levels. Take a look!

CAD/CHF Trade Setup

In my watchlist blog post, I showed y’all how the pair had broken below a descending channel pattern on its 4-hour time frame. I had second thoughts about short right there and then because price was also testing a major support zone.

This time around, I’m seeing a new falling channel forming, with price stalling at the mid-channel area of interest. Applying the Fib tool on the latest swing high and low shows that this potential resistance area coincides with the 38.2% retracement level, which might be enough to keep gains in check. Stochastic is already indicating overbought conditions, too!

CAD/CHF 4-hour Forex Chart
CAD/CHF 4-hour Forex Chart

I’ll just wait for stochastic to turn lower and hint at a return in bearish momentum before shorting. I plan on setting my stop past the channel resistance and highest Fib then I’ll aim for the channel support or the swing low at .7150 as my initial target. Zooming out to the daily chart shows that I can still set my sights on the longer-term range support as my ultimate PT.

CAD/CHF Daily Forex Chart
CAD/CHF Daily Forex Chart

I’ve got a bearish Loonie bias because of the recent slide in crude oil and the expected slowdown in demand from China. I’m still gonna keep close tabs on OPEC headlines to gauge if the oil cartel might agree to extend its output deal by another nine months in order to keep oversupply concerns at bay, something that might lead to a strong rally for the oil-related Loonie.

I’m liking the European currencies these days as sentiment has improved in the region after the French elections. However, I’m worried that the euro may already be overbought while the pound has BOE event risks line up so I’m shifting my focus to the franc. Economic reports from Switzerland have been upbeat lately and this currency tends to benefit from safe-haven flows as well.

Here’s what I have:

Short CAD/CHF at .7325-.7375, stop loss at .7475, profit targets at .7125 and .7025. I’ll be risking 0.5% of my account on this setup for a potential 2.6-to-1 R:R.

I’m treading carefully at the moment since the American Petroleum Institute just reported its largest crude oil stockpiles draw so far this year, which could lead to a stronger bounce for the commodity and a larger correction for the Loonie. I’ll keep y’all posted when I do hop in!

Got any comdoll setups you’d like to share with me? Don’t forget to check out our risk disclosure!



See also: Q1 2017 Trading Performance Review

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