The Daily Trade – Day 42 (the result)

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Trade Number 42 (the result) – USD/CHF 4-Hour Chart

A few days ago, I told you all about a trade on the USD/CHF 4-hour chart, which took a while to reach a conclusion. Well, the trade has now run its course, so I’d like to re-cap on what the trade was and tell you about the result.

 

Figure 1.

If you take a look at Figure 1., you might remember that there was a nice support/resistance level on the USD/CHF daily chart that we had been looking at for any price action signals on the daily, 4-hour, and 1-hour charts. My concern with this trade, as I had previously mentioned, was that we would be going against some very strong upward momentum, and there had also been a significant gap up which might have acted as a minor support area as well. For these reasons, I opted against taking a live trade, but instead chose to monitor the trade as a matter of research.

 

Figure 2.

If you take a look at Figure 2., just to remind you of the setup as it was a good few days ago that we discussed this, you will see that a nice bearish engulfing pattern had emerged on the four hour chart, which could have been taken as a short trade with a stop loss just a few pips above the high of the move.

 

Figure 3.

And finally, if you can now turn your attention to Figure 3., you will see that this trade would have in fact come off very nicely to the down side if you had taken a risk-reward of 1:2. However, it is always better to be cautious and if you have any reservations at all about a trade, then you should probably stay away from it and just watch from the sidelines. So that’s it for that trade. See you tomorrow.

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