Aaaand I’m in! Thanks to a pullback after a downside break, I was able to jump in on the dollar’s selloff.
Last week we were talking about how USD/CHF just broke below an ascending triangle setup on the 1-hour chart. Fast forward to today and we now see a pretty clear short-term downtrend for the pair.
The dollar just encountered resistance at the .9930 area, which is right around the 61.8% Fib retracement, falling trend line, and 100 SMA resistance on the 1-hour time frame.
Fundamentally, I can still get behind a short-term dollar short. For one thing, market players are only cautiously optimistic over the House passing its tax bill version, mostly because the real battle (read: Senate vote) has yet to come.
And then there’s Mueller’s decision to subpoena a bunch of Trump’s campaign-related documents. Remember that focus back on Russia’s alleged involvement in the election means focus AWAY from the Trump government’s tax and other related programs.
Even rate hike speculations have lost its luster in boosting the Greenback. See, a lot of traders have already priced in a December rate hike that they’re already paying more attention to next year’s voting member for clues on the central bank’s policy direction.
Until we see significant (and popular) progress on the tax issue, it’s likely that the dollar will extend its downtrend against the franc.
For now, I’ve entered a 0.50% position at .9925 and placed my stop loss above parity (1.0025). I’m initially targeting the .9525 area, but I could adjust it depending on how the dollar’s story develops.
Here’s the gist:
Risked 0.5% at .9925, stop loss at 1.0025, and initial profit target at .9525.
What do you think of my setup? Think the Greenback will continue to lose pips against the franc, or will the move run out of steam?
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