Short USD/CHF on Confirmed Break of Rising Wedge
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USD/CHF Trade Highlights:
- USD/CHF bearish rising wedge in context of downtrend
- Close outside of pattern triggers trade
- Looking for a new swing-low from February
For longer-term set-ups, check out our Top Trading Opportunities for 2018
The grinding rally in USD/CHF since the low last month has carved out a rising wedge within the context of the downtrend dating back to November. The overall tone to the dollar has been corrective in nature, with the price pattern in USD/CHF highlighting this behavior.
At the time of this writing, price is outside of the wedge, but for confirmation a closing daily bar below the lower trend-line of the pattern is needed to trip the trigger for a short. Stop-losses can conservatively be placed above the 3/20 swing-high, out of harm’s way.
There are some minor support levels when looking lower, but in looking to a new swing-low from last month, there is support from May 2015 down surrounding 9100. Tentatively targeting the area just above in the event a reversal prior to the reaching the depths of support. However, should there be strong momentum upon approach then holding to see if a break is a prudent approach. We’ll address this later should it become relevant.
Risk/reward on the trade is over 1:2 based on current levels. This is taking into account a stop-loss above the 3/20 swing-high placed at 9589, with a target above support placed at 9125. For those traders who perhaps don’t have hold-time objectives ranging up to several weeks, can use the pattern break to shape their short-term trading bias when looking for set-ups on say the 4-hr time-frame.
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USD/CHF Daily Chart (Rising Wedge on Verge of Breaking)
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.