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After my unfortunate EUR/USD trade, I’ve decided to take a step back and look at a longer time frame, this time on USD/CHF. What do you think of this setup?

On the 4-hour chart, we can see that USD/CHF is having trouble breaking below the .9600 major psychological level. This isn’t surprising since it also lines up nicely with falling channel support that’s been holding since late last year. Right now the pair is sporting a bullish divergence, which could add to the pressure to pull the pair higher.

USD/CHF: 4-hour Forex Chart
USD/CHF: 4-hour Forex Chart

As mentioned in my last EUR/USD setup, I’m still fundamentally bearish on the Greenback. See, I believe that there are still some traders out there who have yet to let it sink in that the Fed won’t be as aggressive with its interest rate hikes as we had believed for most of 2015. And with the Swiss National Bank (SNB) avoiding any overt jawboning lately, trading USD/CHF’s downtrend kinda makes sense.

I’m not into countertrend trading, so I’ll just wait for a decent retracement before I jump in on this downtrend. One scenario is a retracement to the mid-channel levels, which also happens to be near the 100 and 200 SMAs on the chart. Another one is to trade a break below the support level, which will also mark a new 2016 low for the pair.

How about you? What’s your bias on the dollar and how would you trade this setup? Feel free to share your two cents!



P.S.: Remember to never risk more than 1% of a trading account on any single trade and to adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Better yet, read the Risk Disclosure!

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.