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Trade Closed: 2008-03-20 10:19

Looks like we took one to the chin today as the US Dollar rally forgot to stall around 1.0050 against the Swiss Franc, and actually took us all the way up to our stop at 1.0150.

Ok, it really didn’t forget to stall, but it looks like traders are leaving the commodity plays and buying back US Dollar by the boat loads. Much hasn’t changed fundamentally in the last few days, so I think this is just profit taking on short USD and commodity positions ahead of the long weekend. I still like to short USD in the long term, but for now Dollar bulls have control.

Total: -100 pips
-1.0% loss

No trade idea tonight as we may see low volatility heading into the Easter weekend.

Trade Idea: 2008-03-19 22:38

PoD Chart

We’ll take another look at the Swissy as today’s price action has led us to another potential short play.

It looks like the pair is in consolidation mode for now as it has stayed in about a 100 pip range since the retracement. This could lead to a breakout move, but which way will it go?

Fundamentally, I still like a short play as interest rate differential now favors the Swiss Franc and even after all of the big moves the Fed has made in the past week, it will still take time to contain the financial crisis and bring back liquidity.

If the pair travels just a bit higher, we may see resistance around 1.0050 as it lines up with the 61% Fibonacci retracement level. Stochastics are still in overbought territory, so sellers may be ready to jump in this range.

Short USD/CHF at 1.0050, stop at 1.0150, pt1 at .9950, pt2 at .9700

Remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.

We do have event risk for both currencies, so be on the look out for possible whipsaws and volatility.

Good luck and good trading!

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