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I’m seeing a lot of consolidation on the comdolls recently, but it’s this symmetrical triangle on AUD/CHF that’s looking prime for a breakout.

AUD/CHF Trade Idea

This pair has formed lower highs and higher lows for nearly a month already, creating a triangle pattern visible on the 1-hour time frame. Price is currently bouncing off support and might be due for another test of resistance while stochastic is heading north.

The top of the triangle just past the .7600 handle could still keep gains in check for now, but I think it’s just a matter of time before a breakout happens.

AUD/CHF 1-hour Forex Chart
AUD/CHF 1-hour Forex Chart

When it comes to which direction the breakout might go, I’m seeing equal chances for an upside or downside move for now. As Forex Ninja highlighted in his intermarket correlations update, iron ore is testing technical support levels at the moment and it could take the positively-correlated Aussie along with it.

This pair might also take its cue from overall market sentiment, with risk-on vibes likely to benefit the higher-yielding Aussie. There are a few geopolitical risks in play, though, so price action could be headline-driven from here.

In terms of data, Australia is set to print its building approvals, private capital expenditure and construction work done data this week. Meanwhile, Switzerland has its retail sales and manufacturing PMI on the docket.

I’m going for a straddle play on this one, keeping close tabs on the .7650 and .7550 minor psychological levels to catch a potential breakout either way. The chart pattern is approximately 300 pips tall so I’ll be aiming for the same amount with my profit target. I’ll keep you guys posted when I do hop in!



See also: Q2 2017 Trading Performance Review

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