CAD/CHF traders have been laying low, but will tomorrow’s employment update get the party going again?
News Setup on CAD/CHF?
On the one hour chart above of CAD/CHF, we can see the pair has been in a solid uptrend (going back to the beginning of February), but the market seems to have consolidated around the 0.7350 handle.
The rise was likely due to the recovery theme (expectations that vaccine rollout and stimulus will bring a strong global recovery and fast rise in oil demand), but this week, it’s likely traders were repositioning on the Loonie ahead of the Canadian jobs report coming tomorrow. Expectations are for Canada to improve on January’s disappointing read, so the odds are that the Loonie may rally going into the weekend.
Whatever the results and resulting market reaction may be, the consolidation above is typically a setup that can be used with a straddle entry strategy. Basically, entering buy orders above market and sell orders below market in expectation that a catalyst will quickly drive the market one direction or another.
Consider using this strategy for a very short-term play, and when using the daily ATR of around 85 pips as a exit guide, we could see moves as high as 0.7430 or as low as 0.7270 after the event, all dependent on the numbers of course. And when using the other sides of the opposing trendlines as stop guides, then you have potentially strong short-term reward-to-risk setups, depending on your chosen entry / exit levels.
For those looking to play the trend higher for a swing or longer-term position, watch out for better-than-expected results and a break above the falling ‘highs’ pattern. This scenario would likely draw in technical buyers, as well as fundamental buyers looking to play both the pandemic recovery narrative and rising oil expectations.
And vice versa, if Canada’s employment numbers disappoint once again and the rising ‘lows’ pattern was broken, consider a short play for a longer-term swing position if there were fresh catalysts arguing against the recovery theme (i.e., coronavirus variants rapidly spreading, issues with vaccine distribution, bond yields rapidly rising again, etc.)
What do you all think? Are you watching CAD/CHF for a potential trading the news setup or longer-term swing / position play? Let me know in the comments section below!
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.
