This week on the Talking Markets With Marc And Andrew podcast, we selected the USDCHF long as our Trade Of The Week. This goes out to all of our subscribers, including our free members which is why it is sent by email only, (no SMS text is sent for Trade Of The Week ideas).
Franc To The Bank? Watch For Price Noise.
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The U.S. Dollar has been bearish for months without any significant retrace. There were some reversal attempts and we had tried a few longs in the USDCAD only to get stopped out each time. So why the USDCHF this time? Isn’t it the same thing?
While this pair is affected by the Dollar bearish fundamentals, from a technical point of view, it has been consolidating in a more stable way compared to it’s USDCAD cousin. This consolidating recently produced a double bottom formation, bullish pin bar and a strong follow through candle.
Just like the risk of retrace is high for the stock market as it pushes higher, the same idea holds true for the Dollar as it probes the lows. Especially since there has been no real retrace in months. Meanwhile there have been bearish reversal patterns in Gold, the EUR and GBP which further signals a Dollar bullish move is on the horizon.
Non Farm Payrolls is the most important scheduled economic report that is released the first Friday of each month. NFP is often considered an important gauge that the Federal Reserve considers when it comes to interest rates. In other words, NFP can serve as a Dollar bullish catalyst but it does not help to apply logic to the situation.
Friday NFP is released and the Dollar may rally into it as a result of a potential Dollar bullish outcome. Reacting to the news itself is not effective, you have to be in a position going into it. Here is the trade idea:
USDCHF (Risk 1%)
Buy LIMIT: .9085
Stop Loss: .8985
Target 1: .9185
Target 2: .9285
Target 3: .9325
We are using a buy limit below the current market because there is NO reason to chase something long that is in a broader bearish trend. We will attempt to capitalize on price noise, especially going into NFP.
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