USD CHF Short Position Entered 8th October 2012

USD CHF Short Position Entered 8th October 2012

USD:CHF has shown considerable weakness lately so I’ve been waiting for a suitable retrace to enter into the trend.

Although bearish in the main, USD:CHF is entering oversold territory on some time frames so the aim here is really to test the water with a view to covering the position on any sign of incorrect timing.

It’s likely to be a very short term trade, but still worth noting where price is in the main scheme of things on the longer time frames as well as the shorter ones.

Starting with the Weekly chart, the long term trend is very much down and the retrace within that trend has been ongoing for over 1 Year now. Despite that, there’s some very clear negative MACD divergence going on which may suggest the long term down trend is still very much intact but requires far more patience than I’ll ever have to commit to a position on such a colossal scale. The orange 100 MA would make a fair initial target for this current mini-leg down.

The Daily chart shows price at an area of previous support. Even if this support holds, there’s a fair chance we’ll see an overshoot of some point to at least gather a few pips on the down side. ¬†Initial target here would be the gap fill circled on the chart which combines with an old congestion area . Again, MACD preceded the sell off we’ve seen, and in all honesty this is a trade that should have been entered some time ago. A Daily candle close above the falling trend line would be cause for concern, as would a Daily close above the 200 MA / previous swing high of last Week:

The 4 hourly chart shows previous support in the 0.9069 region, and as the main trend is down on all time frames, it would be very unlucky to see a rally of any significance prior to seeing that 0.9069 area re-tested, so for now that remains my initial target for this trade, and from there further analysis can be made:

My Entry is from 0.9334 and I’ve taken the trade initially with a 110 point stop loss and targeting a profit of around 270 points, but as always with my FX trades, If I start to dislike what I’m seeing I’m quite willing to abandon the trade ahead of either level.

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