We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Currency Strategist,@PaulRobinsonFX is a Swing trader. What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/WzRYeqRhUL
  • Despite what your #tradingstyle is, you should be keeping a trading journal. How can you start keeping a trading journal? Find out: https://t.co/0akgWbyJEw https://t.co/4ehMlN4zv1
  • The Euro’s struggle to move higher against a range of currencies continues and without further support this is likely to continue into the year-end. Get your $EURUSD market update from @nickcawley1 here: https://t.co/myZ7R0eGUb https://t.co/12WJd53Cx4
  • The #Dow Jones moved confidently higher last week as it added onto recent gains. Now, #stocks will aim to continue their rally while enjoying support from prior all-time highs. Get your technical analysis on #equities from @PeterHanksFX here: https://t.co/Qb89HIWxBY https://t.co/HMguTvD157
  • How can you trade #forex after a major release? Find out: https://t.co/sdxcXb8q60 #tradingstyle https://t.co/LNcbvVhIc2
  • Have you been catching on your @DailyFX #podcast "Global Markets Decoded"? Catch up on them now, before new episodes release! https://t.co/mk1w1DM2Rh https://t.co/m763epaH2C
  • Crude #oil prices, $NOK and $SEK may rise if Donald Trump’s speech on trade war developments amplifies market buoyancy against the backdrop of critical US CPI and retails sales data. Get your market update from @ZabelinDimitri here:https://t.co/5rdK7xsQNq https://t.co/YnlQjKNZdS
  • RT @next_china: U.S., China chief trade negotiators spoke by phone on Saturday, Xinhua reports https://t.co/dMQtd0g4jY
  • The $AUDUSD and $EURUSD downtrend may prolong as traders counterintuitively buy into their descent. Meanwhile, the USD/CAD uptrend may accelerate on rising net-short bets. Get your market update from @ddubrovskyFX here: https://t.co/dlzJ31kf3f https://t.co/xp8P9MmCgb
  • As we head into next week, Cable is continuing to digest the massive leg higher last month, which at some point soon could mean another surge. Get your $GBPUSD technical analysis from @PaulRobinsonFX here: https://t.co/LJ42YhDe3X https://t.co/5hGwhGBpLB
A CAD/CHF Short That Could Trigger Very Soon

A CAD/CHF Short That Could Trigger Very Soon

2014-05-02 15:05:00
Kaye Lee, Head Forex Trading Instructor
Share:

Talking Points:

  • Long-Term Downtrend in CAD/CHF
  • Brief Consolidation Now Coming to a Close
  • A Short-Entry Trigger That's Flickering Right Now

CADCHF has been in a very lengthy long-term downtrend, as both the weekly and daily charts would demonstrate. The pair is currently consolidating sideways on the lower time frames, but the clear bias for any trade should certainly favor the short side.

On the below daily chart, there are multiple declining lines of resistance. In fact, price action has been so regular that this pattern can be contained within a parallel descending channel (not drawn).

Guest Commentary: Steady Decline on CAD/CHF Daily Chart

A clearly defined and lengthy downtrend is shown on the daily chart of CAD/CHF.

The four-hour chart below shows a confluence of resistance close to the current price. Although it is somewhat difficult to characterize this particular price action using trend lines, a trader with a little imagination would be able to see that the downtrend began a larger downward cycle beginning at the left side of the chart.

Ultimately, CADCHF bottomed out and retraced towards the trend line, stopping just short of touching it before finding resistance. This current excursion to the upside could well be the last breath of a retest before the bigger-picture sellers come in and begin another downward cycle.

Guest Commentary: CAD/CHF Consolidation Now Coming to a Close

A consolidation and pullback to previous resistance on the 4-hour chart of CAD/CHF is helpful in controlling risk for new short positions.

The key zone of resistance for CADCHF is 0.8039-0.8061, an area merely 22 pips deep. When compared to the 80 pips or more of potential downside movement if price should successfully decline to test the lows, even traders who are picky about risk profile should be satisfied.

The hourly chart below already shows a pin bar, which is one of three possible short-entry triggers for this trade. The other two, as usual, would be bearish engulfing patterns and/or bearish reversal divergence.

Guest Commentary: CAD/CHF Short Signal Flickering Right Now

Short-entry signals are now flashing on the hourly chart of CAD/CHF.

A break of the low of the pin bar would signal a reasonable first attempt to hop on to this move, although if price fails and rises higher thereafter, a second or perhaps even a third attempt would be in order. Afterall, it is worth trying at least twice to get on to trades such as this.

On the other hand, traders should bear in mind that the FX crosses (and indeed, many of the major pairs) have been choppy for this style of trading for most of April. Hopefully, May will usher in more cooperative trading conditions, and there are already signs that the market is shifting once again, as the interaction of price with expected turning zones has begun to change.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.