Paper trade: USD/CHF entry 1.0320, stop 1.0300

By Paul | Published: October 2, 2009

I figured I should write this sooner before the market moves more and skew my thoughts on this entry.  After my earlier entry in USD/CHF were stopped out this morning, I tried to enter once, got stopped out; and then an even better setup appeared, so I entered again.  See Figure 1. This is a really awesome setup for the following 5 reasons.

  1. Trend is on our side as it’s still pointing up.
  2. Identical setup to last week’s dive before the climb, same RSI, same candlestick
  3. Bounced right at 1.031, which is at a longer term Fibonacci fan line as shown in Fig. 1.
  4. Another support at round number 1.030, which is very near.
  5. Good reward/risk ratio, see below for calculation.

I entered 6000 units (2/3 position as usual) and placed the stop at 1.0300, just 20 pips away.  USD/CHF climbed up to 1.0345 almost immediately after my entry.  So I moved my first stop to 1.0310 (Fibonacci level) for half my position.  That got taken out minutes later and it marked the bottom (for now) at 1.0309.  I was a bit too hasten to move my stop up for this part.  See Figure 2 for my orders.

One big caveat to this entry is my tight stop at 1.0300.  It is simply too obvious of a stop price.  I’d imagine the market would try to gun the stops there before a run-up.  However, if 1.030 breaks, it would ruin the setup as described above.  And if they’re able to break that level, who knows how far this can go further down.  So I’m keeping my stop as is.

Anyway, I still have half of my initial position left.  USD/CHF is trading around 1.034.  I don’t think I’ll do anything to this position for now.  I’m comfortable with just half position sitting in for the weekend.

Entry:  1.0320, Fib fan line support, see Fig 1.

Stop 1: 1.031, triggered already for a loss of 10 pips.

Stop 2: 1.030, round number support.

Target: 1.038 – 1.040, starting point of this quick dive.

Reward/Risk = 60 / 20 = 3, right on the line of my goal.

Although I am secretly eyeing the 1.045 level as a target, I’ll be cautious starting from 1.038.  Probably by setting a trailing stop if we do touch that.  As always, let’s wait and see how this goes.

USD/CHF

USD/CHF

USD/CHF, 30-min and capture an hour later than Fig. 1

USD/CHF, 30-min and capture an hour later than Fig. 1

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