Why Trading AUDCHF Today Is Better Than EURUSD

There are Forex traders who only trade the EURUSD week in and week out. But what do they trade if price suddenly grinds to a halt? In the last 2 months the EURUSD has been bouncing up and down between a 200 pip range. [tweetable alt=””]Only a Houdini could escape from this zone with a good number of pips in their pocket.[/tweetable]

What is the solution? Analyze and review other currency pairs! The Forex market offers the ability to scan a wide scale of currency pairs… a trader can take advantage of that and find a pair to trade that is in a much better position than the EURUSD. The AUDCHF is such an example in today’s market.

   22- 7- 2014 eu


After price managed to break out of its downtrend (purple line) in March of 2014, the Aussie has been steadily gaining against the Swiss Franc. Since then the AUDCHF is showing clear higher highs and higher lows which are the building blocks of the uptrend channel (green trend lines).

When placing a Fibonacci retracement level on the swing high swing low that broke the downtrend line (1st Fib), price managed to hit the first -27.2 target. The next target for the uptrend continuation is the -61.8% Fibonacci retracement level at 0.8636. But when is the uptrend ready? Lets zoom into a 4-hour chart.

22- 7- 2014 ac


A big correction and pullback to the downside took place after price hit the top of the uptrend channel (higher green line). This pullback is in fact the opportunity that a trend trader is looking for.

When a trend trader sees this type of price action, they immediately calculate “how big will the discount be?” And in this case, although price bounced at many Fibonacci levels, it really only accelerated to higher levels after it had reached the 61.8% Fibonacci retracement level.

After this price bounce, price has in the meantime also managed to break above the counter trend resistance line (orange). This is the signal that the AUDCHF is in a breakout to the upside.

Also notice that the DTT trend indicators are showing an uptrend again – just like with the previous breakout to the upside.

22- 7- 2014 ac 4


The first break and pullback trades have already occurred but a new opportunity has arisen (orange Fibonacci). Price recently bounced off of the smaller 1 hour 61.8% Fib level and is heading towards higher grounds.

22- 7- 2014 ac 1

An entry order at the 78.6% Fibonacci level at .8394 would be the exact place where price bounces off a support line and a broken resistance line. That is great confluence.

There is a change that price might not retrace that deep. I am willing to accept that risk in some cases; in other cases I split up the risk in 2 parts and place another entry closer to price such as 0.8410-15.

The stop loss I am using is below the bottoms at 0.8364. The target is split into 2 parts: 1 aims for the bigger target at 0.8636. The other ones aims for the smaller -61.8 Fib at 0.8488. Both parts use a trailing stop loss.

What do you think of this trade idea?

Name 2 reasons why this trade makes sense to you and try to find 1 reason why not (if possible).

Happy Trading!




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