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With NFP and the weekend right around the corner, I’m not looking to put on fresh risk, but I am putting this solid setup on CHF/JPY onto the watchlist. Check it!

CHJ/JPY Divergence


It’s been a while since I last played CHF/JPY, trying to short the pair on my fundamental bias and catch the major downtrend in price action. That was a bit of a bust as European sentiment picked up on improving data in recent months, but after a strong rally, I think it’s time to re-visit my bias in the Japanese yen over the Swiss franc.

Fundamentally, I still rank Switzerland at the bottom end of the spectrum relative to the major economies, mainly on weak inflation, consumer sentiment and on its negative interest rate policy. Japan on the other hand has seen an improvement in broad inflation, complimenting the positive sentiment and manufacturing conditions.

From a price action perspective, I see the market testing the major resistance area last seen at the beginning of 2017, bringing in the sellers to eventually take CHF/JPY from 115.00 in December down to 108.00 in April. We can also see divergence between price action and the stochastic indicator, potentially signaling this uptrend has finally run out of legs.

Again, with the U.S. employment data ready to shake up the forex markets tomorrow and the weekend just ahead, I’m gonna stick this idea on the watchlist for now and likely put on orders next week.  So, be on the lookout for a new trade idea, and 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.

Risk Disclosure
Pipcrawler’s Q1 2017 Blog Trading Performance

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