Yesterday I wrote about the EURUSD, that it just broke a long term resistance level and got out of the range it traded for more than 2 months. Well, the same happened to the USDCHF, it broke two long term support levels and it is also trading below the range it traded for more than 2 months. Take a look at the next chart:
Now, the next long term support level is around 1.0172, the market right now is trading at 1.0426, this means we have a long way to get there, so fasten your seatbelts :)
My Trading Plan:
As long as the USDCHFkeeps trading below 1.0447 I will be looking for short opportunities and will set all my take profit orders above the next long term support level at 1.0172
Sometimes it’s difficult to determine when to trade a given currency pair. I know that if we try hard (if we force it), we’ll find a reason to trade any currency pair, but, is this our main goal? I don’t think so. Our main goal is to determine WHEN to trade. I always like to trade currency pairs, that have a clear long term and middle term condition. If I don’t see a clear long term view, I rather focus my risk capital in other pairs.
Here is one example, take a look at the next chart:
Can you determine the market condition here?
This is a clear undefined range, the market keeps bouncing back and forth from different support and resistance levels, making it hard to determine those turning points (where we try to enter the market).
This is a clear example of a non tradable pair.
Sometimes the market (or some currencies) doesn’t want to be traded, we are better off risking our capital on other markets (or other currency pairs), we have plenty of them anyway.
Our job as traders is not to trade every day, but to determine when to trade.
The EURUSDhas been trading in a not very well defined range, making it almost impossible to swing or position trade this pair. Right now it is trading just at the top of that range, if it breaks it, it has a long way to go to the next long term resistance level. Please take a look at the next chart:
The major resistance level is marked by the solid blue line, the green lines mark the short term range that the EURUSDneeds to break before we start looking for trading opportunities.
Here is my Trading Plan:
If the market breaks the 1.4345, I will start looking for long trading opportunities. The next resistance level is around 1.4653.
If the market keeps trading below 1.4345, I will do nothing.
If you are like me and like to trade based on the long term charts, then you already know the USDCHF is non tradable, at least until it breaks the medium term range. Please take a look at the next chart:
Since late May, the USDCHF entered in this undefined range, where I find very difficult to determine feasible turning points or those major swings. I would rather risk my capital on other pairs where the market condition is clearer.
In the beginning of August the USDCHF tried to break the bottom of the range, but it traded just there, in a short term range and then after the NFP announcement the USD recovered back to no ones land…
So, I will wait for the USDCHF to break the medium term range before I start looking for trade opportunities in the Swiss franc.