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If you love trends as much as I do, then you’re gonna want to look at this short-term setup that I spotted!

On the 1-hour time frame, USD/CHF has just bounced from .9530 area. This lines up with a previous resistance zone as well as a trend line and 100 SMA support. Not only that, but Stochastic has also just left the oversold territory.

USD/CHF 1-Hour Forex Chart
USD/CHF 1-Hour Forex Chart

I’m thinking that this is an opportunity to buy the dollar one more time. After all, nothing has really changed with the fundamental landscape since the Fed is still expected to raise its rates early next year. The dollar is also getting extra support on escalating geopolitical concerns and overall risk aversion.

My concern for this setup is that the dollar might be overbought at the moment. Based on today’s Asian session moves, traders are taking profits ahead of this week’s ECB monetary policy updates and NFP report. On the technical side, the pair has tested (and hasn’t broken) the .9600 major psychological level.

I’m willing to risk as much as 0.50% on this short-term trade, but I’m not too keen on pulling the trigger just yet. I already missed the .9530 entry and I’m not willing to enter the market until the pair breaks above .9600.

What do you think of entering after the ECB decision? Since the latest eurozone reports are still disappointing expectations, I’m thinking the ECB is gonna have a tough time convincing investors that its current stimulus plans are enough. We might see new EUR/USD lows this week, and the dollar bulls might get back in action.

What do you think?



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