USD/CHF 4,665 Pip Trend to Breakout
It is now no secret that the SNB (Swiss National Bank) has taken measures to prevent further
appreciation
of its currency. This action has temporarily suspended our multiyear down trend on the
USD/CHF
pair. From its peak in June of 2010 (1.1730) the
USD
/
CHF
has moved 4,665 pips to its low on the 9th of August this year. The pair has recently carved out a monthly low at 76.78 just 6 pips shy of the 2011 low established in March. Currently price resides at .7860, falling just shy of the psychological .8000 level.
At this point it is difficult (if not impossible) to determine if, when or where the SNB may re-enter into the market on behalf of their
currency
. As the global economy continues to worsen, it is certain that investors will demand safe haven currencies such as the Swiss Franc. With fundamental factors mixed, we can use a
breakout
strategy to take advantage of our next market swing.
Price Action
Taking price in to a 30 minute chart we can best see support and resistance levels established during this week’s trading. Support resides at .8000 and resistance lies just below near .7750.
Ranges
are always a precursor to a future breakout.
Entry orders
will best serve traders looking for the next market move uncertain of direction. Bracketing price action as seen below, we can take advantage of a move to new highs, or fresh lows.
Trading O
pportunity
My preference is to use entry orders to bracket the USD/CHF awaiting a fresh breakout. Entrys should be placed to buy over .8050 and to sell at .7710.
Stops
should be placed at the midpoint of our range at .7880.
Limits
will target a minimum of 340 pips for a clear 1:2 risk reward setting.
Alternative scenarios include price continuing to range prior to a breakout.
Walker England contributes to the
Instructor Trading Tips
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