Trade Example – USD/CHF

Filed under: Learn Forex Trading |


I have a trade example for you today on the USD/CHF forex currency pair, which is the exchange rate between the United States dollar and the Swiss franc.


Figure 1.

To begin with, take a look at Figure 1. This is the daily chart for the USD/CHF pair. We always use the daily charts to check for trends, and this is no different. What the chart shows is that the pair is visibly moving up from left to right. This is fairly clear just by a casual inspection. However, if you need any confirmation of this whatsoever, then you can also see that the 8-day exponential moving average is crossed well above the 21-day exponential moving average, and if anything, the two moving averages are moving even wider apart. This is always a good sign of strong momentum. In this kind of trend, we should only really be on the lookout for price action signals, which confirms this bullish trend, so that is exactly what we do.


Figure 2.

Figure 2 shows the 1-hour chart for the same USD/CHF currency pair. What you can see here is that price had taken a slight breather and formed a nice level of support in the market. So when price gapped down and hit this level once again and formed a bullish engulfing pattern, this would have been a good time to put an order in at a 50% retracement of the bullish candle, with a stop loss placed just a few pips below the low of the move, and a target of two times our risk.


Figure 3.

Figure 3 shows that this trade would have been successful. Price moved up very nicely after this and we would have had a very nice 2% rise on our bank. That’s it for today – more tomorrow.

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