GBP CHF Analysis For New Swing Long Entry 3rd February 2012

GBP CHF Analysis For New Swing Long Entry 3rd February 2012

I’ve entered a GBP:CHF Swing Long Position today based not on my system but through seemingly bullish Technical’s on most time frames. I prefer to take swing long entries from levels that have proven themselves as support but I’ve not done that in the case of GBP CHF which put’s me slightly outside of my comfort zone but does still allow for tight stop losses were I to choose a low risk option for this trade. Firstly it’s the 4 hourly chart that attracted my attention: A clear breakout of the down trend, a successful retest of that down trend, 20, 50 and 100 MA support and even if the trade was to fail, it’s a very high probability that the 200 MA will receive a visit before continuation of a possible down trend, so price action at the 200 MA will be a very importantĀ gaugeĀ of this trade’s sustainability:

A quick look at the Hourly chart and again we can see that all Moving Averages are pointing the right direction, all have offered support and the price pattern has an appearance of an Inverted Head and Shoulders bottom. In the early part of this trade, four 1 hourly closes beneath that (green) 200 MA will probably have me heading to the exit button:

A quick look at the daily chart shows the up trend has been reasonably consistent in finding support at various levels (circled) and yes, I was planning on buying that first back test but SNB got there first! We could have an argument that the up trend is looking a little tired, but we could also argue that it’s in the process of breaking out of a bullish consolidation. It’s a little more difficult to be confident on this time frame but it’s quite clear that a minimum upside target would be a double top, followed by the next major resistance around 700 pips North of the current price level. Note the unfilled gap at 1.4182. Any signs of that gap becoming a possible target and I’m abandoning the trade:

Finally, this is the time frame that concerns me the most, and in some respect it’s the most important time frame when planning to hold a long term swing trade. Price has a marginal appearance of rolling over, and MACD has a major appearance of rolling over. MACD may cross negatively but it is also common to see many Months of negative divergence before a rally peter’s out. Nonetheless, not seeing confirmation on this time frame does concern me a little, so I will be monitoring the trade intraday initially until I can get the stop loss to break-even or get out with minimal loss:

So to conclude, the risk of failure is certainly visible but the hourly and 4 hourly time frames should be very quick to confirm failure which will mean minimal loss. Beyond that and if I can get stop losses to breakeven over the course of the next Week, then the risk of failure wont bother me so much – There’s plenty more trades out there if this one fails, and Capital preservation must come first even if you exit a trade to hastily.

Fundamentally, whoever is shorting EUR:CHF are effectively seeing how far they can push SNB into a reaction. If SNB live up to their promise, they will intervene at EUR:CHF sub 1.20 which would add favour to this GBP:CHF trade.

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8 Comments
  • RS2OOO
    Posted at 20:34h, 03 February

    Note:

    CFTC reports a 10% increase in CHF long positions this Week.

    This can potentially be a contrarian indicator so not something I’ll take much note of, but worth being aware.

  • New Stocks to Watch | Wall Street Stocks
    Posted at 22:32h, 03 February

    […] list emailed to you right away. You'll also get specific entry points as well as risk parameters.ABX: Forming trade pattern on the 60-minute chart, but not close enough on the daily chart yet. AIG:…18.91 today. Up nicely since then. Daily chart buy not confirmed yet. AU: Same pattern as Barrick […]

  • This Week's Swing Trading Review; 4th February 2012
    Posted at 11:33h, 04 February

    […] were taken, but in the event the NFP number would have actually taken it to a +300 pip profit.A GBP:CHF long entry was taken on Friday and you can read a full analysis of that below this post.Most of the […]

  • RS2OOO
    Posted at 21:21h, 07 February

    Think I’m going to scratch this trade.

    Some ugly looking Candle’s across most CHF pairs today. GBP wasn’t hit as hard as most, but it’s becoming more difficult to see the bullish side in the short term.

    Probably should wait for the stop loss to do it’s work, but I may want to just get out before any potential damage is done. Will be keeping an eye on it for the next couple of hours.

  • Some Mid Week Thinking EUR USD, GBP USD, DOW 7th February 2012
    Posted at 23:16h, 07 February

    […] volume for over 10 years! That makes for some quite dull price action.Still hanging onto the GBP:CHF swing long which currently shows a 4 pip profit as I type this. Virtually every CHF pair produced […]

  • RS2OOO
    Posted at 21:23h, 09 February

    The GBP:CHF long was stopped out today for a 91 pip loss.

    Annoyingly, it was stopped out 1 pip LOWER than the day’s low. I’m assuming the spread was skewed against me for that precise moment. Frustrating that it then rallied into what would have been a profit.

    Fixed spreads don’t mean fixed spreads when there’s a stop loss ready for the taking!

    I find it more frustrating in this case because a day trade short position I’d decided to run overnight was also stopped out 1 pip ABOVE the high of the day on another FX pair.

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    Posted at 12:27h, 12 February

    […] Trades I chose to run over the last Week turned out to be the most Volatile FX pairs around! The GBP:CHF long didn’t play out as expected with huge swings in both directions. Ultimately this was […]

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    Posted at 23:25h, 15 February

    […] For analysis supporting the trade it may be worth revisiting the original post that can be found here.Following that original analysis I don’t have a lot to add, only to say that the base of […]