Forex Technical Trade Setup: Long EUR/CHF - Profiting with Forex (PFX)

Forex Technical Trade Setup: Long EUR/CHF

Right now I have a short position on the USD/CHF (ouch) but I still think there is some opportunity and compared to the profit potential it is worth hanging onto a little more risk to see how things play out. However, I am very interested in mixing it up a little in my account and I found an interesting opportunity this week on the EUR/CHF. Currently the pair is breaking out of a consolidation in favor of the EUR and from a technical perspective it looks like this has some room to move to the upside yet.

The first thing I see on this pair is the breakout last session from a flag pattern against the previous bull trend. You can see that breakout in chart #1. That seems interesting and I would initially target the 1.6700 range, where there is some resistance from last December's rally. In chart #2 you can see a technical divergence appearing right now with lower lows in the price while an oscillator (14 period CCI) is making higher lows. This is pretty bullish and a good example of this same setup occurred in March.

I like the trade from a technical perspective but it is also one way I can diversify my long CHF exposure in my short USD/CHF trade.

Charts can be seen below.

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Chart #1: The setup.

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Chart #2: I am looking for December's resistance as an initial target.

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Hemadri Singh

Forex Technical Trade Setup: Long EUR/CHF
Jul 23 2008 21:01:33

** This thread discusses the Content article: Forex Technical Trade Setup: Long EUR/CHF **

I know what is coming.... "Why are you shorting the CHF here when you are long the CHF in the other trade - make up your mind... waaah waaaah I can't think for myself... boo hooo"

So to all you whiners I would remind you that the base currency is different in both trades. That makes a difference as I am trading the strength of the EUR in one case and the weakness of the USD in the other trade. Using two trades rather than a single long position in the EUR/USD helps to break up some of the unsystemic risk (thanks John) that is greater in a single position.

Because I have reasonably large profit targets I am not concerned about the additional trading costs of such a pairing.

So shut your pie hole!

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