Paper trade: Long USD/CHF @ 1.0122, SL 1.0060, TP 1.0225

Seeing that this is my first commitment after the big drawdown, I'll bring back my tradition of writing a post to log my rationale and market conditions on this entry for later review. I sifted through the weekly charts of all pairs on my watch-list tonight and found that USD/CHF long is the most promising. Figure 1 shows my daily chart for the setup and Figure 2 is a 3-hour chart with my entry timing. Let's talk about Figure 1 first. USD/CHF is making a triple bottom with a positive divergence as shown. I have also marked the current major support at 1.0010. USD/CHF has trade below it for about a week now but failed to break any lower. Today is the first day when we've opened somewhat above it. Secondly, note that we have broken above a descending channel as shown in Figure 1. USD/CHF has also tested the 1.0010 support twice already at both sides of that channel. And accompanied with a positive divergence as I said. The major caution as shown in Figure 1 is that we're still trading below the 10-day ma. As for the entry timing, observe Figure 2. Notice that USD/CHF just made a higher low outside and above the descending fChannel (the two thicker brown lines). This is the signal for entry. Note that the fChannel is my proprietary channel. This trade is initiated according to my new Forex Trend Fading (FTF) setup. Position size: 100%, 50% Entry: 1.0122, from fRays signal. Stop: 1.0060, below major support Target: 1.0225, first major resistance, ease off some at that point, add more above it. Reward / Risk = 103 / 62 = 1.66 \< 3. Not not good enough for my usual R/R target, but I've been considering lowering it to 1.5. So lets see if an R/R of 1.5 is a good enough number. I would have been more comfortable with a 2.0 though. Anyway, let's see how this goes. Update: I took half of it off at breakeven because of the lower R/R and the new setup. Only 50% in this trade now. I'm looking to add a EUR or JPY cross for my other half allocation. Update 11/19: I'm stopped out of this position @ 1.0150 for +27 pips.

[caption id="" align="aligncenter" width="580" caption="USD/CHF"][USD/CHF]USD/CHF[/caption] [caption id="" align="aligncenter" width="580" caption="USD/CHF, 3-hour"][USD/CHF,
3-hour]USD/CHF, 3-hour[/caption]

Posted 18 November 2009 in forex.