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If the U.S. and China can really strike a trade deal soon, I’d want to be ready with a long comdoll play. Here’s why NZD/CHF might be a good pick.

Long NZD/CHF Idea

I’ve decided to play the Kiwi for a possible risk-on move in the days ahead since it might have more room to climb compared to the Aussie. Looking at the trend strength analysis of NZD pairs on MarketMilk™ reveals that NZD/CHF looks ready to switch over to bullish territory soon:

NZD Trend Strength

Its longer-term trend still seems to be bearish as indicated by the descending channel on the daily time frame, but it looks like a small double bottom reversal pattern is forming.

A break above the neckline around the .6400 handle could be enough to confirm that a bigger rally might follow, possibly taking the pair back to the channel top around .6650. Stochastic is still pointing up to show that bulls have the upper hand.

NZD/CHF Daily Forex Chart
NZD/CHF Daily Forex Chart

Meanwhile, the franc remains under pressure on the persistent threat of SNB intervention, as well as the improvement in risk appetite.

I haven’t set any actual orders yet since I’d like to get more clarity on U.S.-China negotiations before hopping in. I’d prefer to hop in when major headlines turn out positive AND price is able to bust through nearby resistance levels.

It would take a big pickup in volatility to convince me to enter this trade, though, as NZD/CHF typically moves an average of 50.9 pips per day.

NZD/CHF Volatility

I might need to wait until Thursday to see a strong move for this pair, but I’m eyeing an entry around .6425 with a 75-pip stop. As for my target, I’m looking at the channel top and might aim for .6625 for a 2.67-to-1 R:R.

What do you guys think?


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.