04 Dec CAD CHF Breakout Back Test to Offer Swing Long Entry
I’m approaching this new trading Week using absolutely nothing other than technicals to determine up and coming trades. Looking at the various fundamentals and stories in the media just end with me scratching my head and being too frightened to enter any trade!
So, the following trade is one I have no fundamental belief in whatsoever, but am sticking purely with the technicals.
The CAD:CHF story started some time ago for me, depicted by the red arrow in the chart below. After the huge rebound in August 2011 I was looking for a retracement to take us all the way back up to the original break down point, which I discussed in this post as a potential “box trade”. I opted not to trade the long side of this predicted move because the price range was just huge and I really couldn’t get comfortable with the required stop loss placements.
Original daily chart:
Current daily chart shows that price has continued to slowly head towards the desired target and has this week broken out of a 10 week daily range:
Zooming into the 4 hourly chart a clearer picture of the break out can be seen:
So, the question is, break out or fake out?
It’s a tough question so in order to trade this with minimal risk I’ll be looking for price to either successfully re-test the break out level at approximately 0.9006 or to come back inside the congestion area and find good support where long entries can be taken. Upside target sits at 0.9350 area which would offer a 320 pip profit from current levels.
If no support is offered, I’d then consider looking for short entries on a break below the upper sloping trend line, with the entry being on a back test of that trend line from below.