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The USD/CHF pair has made a considerable bearish retracement in the past month, as noted by James Chen “this currency pair has given back virtually all of the substantial gains that it made from mid-April to early June.”  While the pair is in a long-term downtrend, as discussed below, we still feel there is room to take a counter-trend trade on this forex pair.

First chart below shows the dollar index, which is close to an uptrend support line – our trade would be further confirmed by a coinciding bounce off this line.  Monthly chart shows the long term downtrend of the pair, however, of note is the failure of the pair to make a lower low on the last dip.  We’d like to see a solid break of the resistance line shown, while a break below the support line would invalidate this trade for the time being.  Weekly chart shows recent bullish movement.

Recommended reading: James Chen’s Chart of the Day – USD/CHF.

The 1HR chart below shows our entry trendline for this trade, with the 2HR chart showing our initial target.  A break of the yellow downtrend line would signal further bullish movement and we may consider adding to the position.

Update: Trade taken at 1.0560 at break of our entry trendline.  Be cautious of the weekend gap.  Chart below.

ID 07.2 | USD/CHF Buy | LIVE | Entry: 1.0560 | SL: 1.0475

Prices on the EUR/USD and USD/CHF have shown considerable dollar bullishness in the last few days, but it looks like the long term S/R’s on the pairs are going to hold.  We were looking for either a break of these trendlines or a bounce off them (see http://www.wtfxlive.com/?p=182).  At this point we’re treating price action as a bounce and have taken countertrend break trades on both of these pairs.

Update 11/3: Got stopped out on these trades.  Briefly considered taking dollar countertrend trades, but with the volatility in dollar at the moment, we’re going to wait for a bit before trying another position.

“Better to be out wishing you were in than being in wishing you were out.”

The dollar has been weakening for, well, the whole year really.  These trade setups are based on a reversal or at least a retracement on that trend.  The reason I’m looking to take these trades now is based just on the fact that I believe the US stock market to be oversold and I don’t think the DOW is going to be able to stay above 10,000.  Also, pairs such as the USDCAD are showing some dollar bullishness.  Obviously, because these are counter-trend trades, lots of care should be taken when executing these, and I won’t be taking large positions on any of these trades until I see solid dollar movement to the upside.

Charts below show the daily trend and the hourly entries.  Stops would be placed above the recent highs and lows for these pairs.  A close below the green lines are entry points for me.

Update: Unfortunately I was not at my trade station when these pairs broke below their 15min entry points, will have to wait for a retracement and see if the opportunity for short term entry comes up.  However, daily and hourly entry points for these trades are still valid, waiting for a break or bounce.

Update 11/1: While price did break down below the daily and hourly trendlines for these trades, I’m not convinced that this has not been a false break due to volatility with dollar.  At the moment, I’m looking for a trend continuation trade on the dollar pairs.