AUD CHF Safe Swing Short Entry Following Retrace

AUD CHF Safe Swing Short Entry Following Retrace

As recently discussed, AUD:CHF has been on my watchlist for a swing short entry for some time, just waiting for the ideal set-up to materialise allowing for a really low risk short entry. Unfortunately, when the ideal entry occurred it did so overnight and by following morning a good chunk of the initial move had already taken place therefore skewing the ideal risk vs reward parameters.

The original analysis can be found here. We have now had the retrace I’ve been waiting for. Some would probably argue that entering on the first retrace from an initial leg against the main trend is in itself risky, but for me doing so ¬†allows for tighter well defined stop loss positioning and usually gives an answer relatively quickly as to whether your trading idea is right or wrong. Ultimately, the less time we are in the market, the less time we have our capital at risk, and all of these factors combine to answer why I’ve now entered short on AUD:CHF.

The daily chart shows a drop back to the 200 MA, followed by a rally back to the 20 MA. I’ve shorted the touch of this 20 MA on the basis that price has left a gap below which is a tradable target in itself, but more so, that even if the trend remains up, we should see some kind of consolidation between the 20 MA and 200 MA before a new leg up.

On the risk side, we do have an overall sequence of higher lows, so the trend is certainly not confirmed as changed just yet. Arguably we could potentially have a Head & Shoulders Top formation, but again, it’s a little early to speculate on such a set-up.

here’s the daily chart, showing areas of unfilled gaps below the current print:

Moving to the 4 hourly chart and we can see that in line with the daily 20MA, we have the 4 hourly 200 MA and the 61.8% fib retrace from the high to the low of last Weeks sell off, adding yet more reasons as to why resistance may be found in this proximity:

I’m currently running stop losses above 0.9242 (around 70 points North of here) and will either use that area as a level to stop the position out, or, alternatively four 4 hourly closes above the 200MA will probably have me re-evaluating the whole theme.

It’s not the best of technical set-ups by any means, but overall probability does favour some further down side to come, and even if that does not follow through as desired, there should be some opportunity going forward to take some kind of profit out of the position, or at least fall to a level where we can get stop losses set to break even.

  • RS2OOO
    Posted at 22:55h, 29 November

    Got squeezed on this position a bit today.

    I revisited my stop loss level but don’t really think I want to adjust it.

    I’m pretty sure we’ll see the downside I’m looking for, but not willing to give more room on the stop loss for it, so just a case of waiting for now to see what happens. If the position gets stopped out, I’ll be waiting for another signal to get back into the position.

  • RS2OOO
    Posted at 22:40h, 30 November

    I was stopped out of the AUD:CHF swing short today for a 100 pip loss.

    The trend is clearly up at the moment so I’m watching with caution, but ultimately still have confidence that the move I was originally looking for will eventually materialise.

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