Live Trade – USD/CHF

Filed under: Live Trades |

I have a live trade currently in play on the USD/CHF forex currency pair. Given the bad run I have been on lately and the drawdown of 7%, I was conscious of not trying to chase this and make any trades that are not really there. However, after scrutinising this one for some time, I realized that there was a great deal of confluence with this trade.

 

Figure 1.

Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the USD/CHF pair. What you can see here is that the pair has been moving up over the last few days and the 8-day exponential moving average is in fact crossing above the 21-day exponential moving average. This is the one negative against taking this short trade. However, if you look at the longer-term trend, you will see that the overall market sentiment is down, and at the close of today’s candle, this moving average crossover may in fact not happen at all.

 

Figure 2.

Figure 2.

Now for the positives – there has just been a pin bar poking out from an inside bar (sometimes called a ‘fakey’), and this is rejecting a very significant long-term area of support/resistance. To add to this, it is also a 61% Fibonacci retracement area. But there is one more thing to add to this that goes in our favour. If you look at Figure 2, you will see the 4-hour chart for the same USD/CHF pair. To begin with, there are a lot of bearish signals on this chart: a bearish pin bar, a bearish engulfing pattern, another bearish pin bar, and another bearish engulfing pattern. Also, the RSI indicator shows a negative divergence with price, which also tips us off to the fact that the market sentiment may be turning. In light of all of this evidence, I have taken a short trade here, with a RR of 1:2. We will see how this one pans outs in due course.

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