Not a fan of many setups on the shorter timeframes as volatility remains relatively low, so I zoomed out to the daily charts & found this potential setup to play my fundamental biases on USD/CHF.
USD/CHF Trade Setup
With mostly better-than-expected data recently coming out from the U.S. (surprisingly strong net job gains & continually strong PMI / consumer sentiment numbers hinting at continued strength) and likely further rate Fed rate hikes ahead, I’m a “cautious” bull on the U.S. dollar. I’m cautious because the data may already be reaching peak levels and of course, there’s always the “Trump” variable to consider (i.e., current uncertainty with future trade, regulation, tax, political environments).
But when paired with the Swiss economy that recently saw 0.00% GDP growth and currently sporting negative interest rates from the Swiss National Bank, I think there will be currency traders out there who could take the recent pullback from the highs around 1.0300 to just under parity as an opportunity to play the growth and interest rate differentials. This area also coincides with the 200 daily MA, rising lows and the previous strong resistance around .9950, so I think there will be technical traders on the watch for support here.
That’s what I’m looking to do today and this is a trade I’ll likely hold for a while to play the recent longer-term uptrend and collect some carry, so I’m going with a 2x Daily ATR stop and initial target at the previous swing high around 1.0300. Here’s what I’m doing:
Long USD/CHF at market (.9979), stop loss at .9820, first target at 1.0300 for a near 2:1 return-on-risk. I’ll be risking 0.5% of my account on this position and I’ll look to re-assess to potentially reduce my risk and maximize my gain if 1.0300 is broken and moves higher.
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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