Lately, I have been discussing the GBP/CHF quite a bit during my End of Day recap.
The reason is that I really like the strong uptrend we’re seeing across multiple different looks and time frames (see article here for more info) and so I am eager to take advantage of possible continuation.
However, one of the Golden Rules in Forex Trading is NEVER chase a trade… So that means we need to continue to wait for this GBP/CHF to come to us before we buy in.
I discussed the steep trend line on the daily chart last week, but from all appearances, the GBP/CHF is not intending to correct that deep.
Fear not! There is another entry point that offers great Risk to Reward and a healthy probability that we’ll be entering in at the right place.
Remember, this is what GBP/CHF looks like on the longer time frame:
As we zoom in to see what the recent move has done, there is a great confirmation of upward potential:
What we see here is a VERY strong break after some counter trend consolidation. This has the making of a Bullish continuation leg on the longer time frame.
Better than just a confirmation point, this recent move gives us a place to enter with a high Reward and low Risk trade.
Using a simple Fibo on the breakout move, we can see where some good entry areas might be to get a better price and increase R/R:
Here, you see that recent tops and the breakout point itself correspond perfectly with our 50.0 Fib retracement level.
For me, this represents the perfect area to place a buy order because it combines strong confirmation points and a much better price than what we could get into now.
A stop below the consolidation period gives us some protection from a deeper correction or choppy movement.
By place our intended levels using the EPIC Trade Management Tool, we can determine what the potential PROFIT vs RISK will look like if we get this trade to come to us.
As you can see, I have used our custom tools to “Set Up” the trade ahead of time so I know what kind of profit potential is on the table.
In this case, if we’re able to catch the GBP/CHF as it runs toward the daily high, I have about 10,500 USD in potential profit compared to $2,600 in potential risk; so this is a trade I am happy to take.
Look forward to your thoughts below! And fingers crossed for this pair to behave!
Winner’s Edge Trading, as seen on: