With a few top tier U.S. economic data points ahead this week, I thought it might be time to take a small shot on the recent uptrend in USD/CHF.
Short-term Play on USD/CHF
For this week, I’m going with a simple tech play on USD/CHF, which has been on an upswing over the past month as seen on the one hour chart above. We can see a pattern of higher “lows” and “highs” to show bulls are in control, and after a couple sessions of USD weakness, we’re seeing a near retest of the rising lows area once again.
Right now, the pairs is finding a little bit of support at the 50% Fibonacci retracement level and the stochastic indicator is signaling potentially oversold conditions, but with U.S. economic data ahead, I’m going to be a bit more conservative and wait for the market to get down to the rising “lows” trendline.
Fundamentally, we’ve got a few top tier reports on the way, including U.S. producer prices, building permits and most notable, U.S. retail sales data. My main man Forex Gump gave us a quick preview of the event and based on his work, there are better than 50/50 odds the numbers could be better-than-expected. If that’s the case, a quick dollar pop could be see, and I do me quick.
I’ll look to play this really short term with really tiny risk, using the daily ATR as my stop guide and the previous swing high as my target for a nice potential return-on-risk. Here’s what I’m doing:
Long quarter position USD/CHF at .9375, max stop loss at .9290, max target at .9530 for a potential 1.82:1 return-on-risk
I’ll be risking only 0.25% of my account on this position and I’ll look to close out quickly if conditions or the data comes out way worse than expected. Also, if no trade is triggered, I’ll cancel my orders at the end of the week as this is intended to be a very short term trade.
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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