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Weak U.S. data this week continues to dampen Fed rate hike hopes so I’m gonna join the short USD bandwagon with this USD/CHF setup.

Short USD/CHF Idea

I’ve been watching the descending channel on the pair’s daily time frame for quite some time now, but I was hesitant to put orders in ahead of last week’s NFP release and SNB Chairman Thomas Jordan’s testimony this week. As it turns out, the SNB head wanted to talk more about the Swiss education system and refrained from any currency jawboning, allowing the franc to advance.

USD/CHF Daily Forex Chart
USD/CHF Daily Forex Chart

Now that I’m seeing more downside momentum on USD/CHF, I decided to hop in at market and go with the flow. The next support area is still around a couple of hundred pips away at .9500 anyway so there’s plenty of room for price to fall. Besides, the pair might even be setting its sights lower at the descending channel support around the .9300 mark if U.S. reports keep disappointing.

Stochastic is making its way down from the overbought region, which means that dollar bears are just getting the selloff party started. A couple of FOMC members (George and Rosengren) have testimonies scheduled throughout the week so I’ll be on the lookout for any hawkish remarks that could bring dollar bulls back in the scene.

I’ll also keep tabs on the Swiss foreign currency reserves report, which should show some clues on whether or or not the SNB has been sneakily intervening in the forex market. I doubt that they have, though, as the franc hasn’t been THAT strong these days, but it won’t hurt to be vigilant and ready to cut losses if a sharp increase is reported.

I’ve got a wide stop past the channel resistance and parity anyway so I could be able to trim my losses if necessary. I’m aiming for the channel support but I’ll be moving my stop to entry once price tests the nearby support at .9500.

Here’s what I have:

Short USD/CHF at market (.9705), stop loss at 1.0025, profit target at .9325. I risked 0.5% of my account on this trade and I’m going for a 1.2-to-1 R:R.

As always, 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 simply follow what I do.

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