USDCHF Longer-Term High Reward:Risk Price Structure Trade

Cory Mitchell, CMT

The USDCHF has whipsawed near the multi-year support area discussed back in late July. A downside breakout is still a possibility, but so is a reversal back to the upside. 

Currently, the key support is being respected, with minor false breakouts below the prior lows. If a downside breakout occurs, the downtrend will continue and there will be opportunity to enter during a pullback in that downtrend. 

This video discusses a strategy for trading that scenario if it develops.

Right now we are still in the price structure, sitting at the bottom of a multi-year range. 

There is the potential to go long for a high reward:risk to trade. And there are multiple options for entry.

The daily chart shows a slight double false breakout below the prior range low (red line) from 2015. The price is now moving back up. 

USDCHF at multi-year range bottom with possible long trade Aug 7 2020

An entry near the current price of 0.9133, with a stop loss of about 15 pips below the recent swing low provides a reward:risk of more than 5.8:1 with a target just below 0.97.

Attaining a better price improves the reward:risk. An entry near 0.9110, with the same stop loss and target provides an R:R of 7.8:1. 

On the hourly chart, one of the first signs of a turn back to the upside came on August 6 near 0.9091. An entry there pushes the R:R up over 10.5:1.

This is a big price structure so it is a longer-term trade. It will likely take two to four months for the price to reach the target, if it does. 

There is positive rollover on the long side, so a small amount of interest is made each night for holding the long.

This video covers more about trading price structures. They can be traded on any time frame, often for big R:R.

Disclosure: long

By Cory Mitchell, CMT

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.


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