Trading Compression- USD/CHF Long Entry At .9654

Trading a product stuck in a consolidation phase can be a challenge. Favorable reward/risk ratios are tough to come by and intraday price action is typically chop city. However, with proper trade location and a reasonable profit target, it is doable.

Building A Trade: Multiple Time Frame Analysis

As I mentioned yesterday, the USD/CHF is trading sideways between key support and resistance levels.

USD/CHF Weekly Chart- Consolidating Safe Haven

The weekly chart gives us a complete picture of just how tight this market is right now:

• Heavy resistance at 38% of the May high/July low at .9691 is the key level to watch on the weekly timeframe.

• Weekly ranges are consolidating. Last week was an inside week and this week is shaping up to be the same.

Now, let’s find a premium entry on the daily chart:

USD/CHF Daily Chart

As of now, the USD/CHF is bullish on the intraday timeframes and has put in a proximity test of .9691. The compression zone between .9691 and .9654 is clearly defined and likely to hold for the remainder of the U.S. session.

Bottom Line: Trading compression can be a nasty business on the intraday time frames. On the larger scale, it is relatively simple: Fade the extremes.

For today, we have a clearly defined compression zone using key support and resistance levels from different time frames. A long trade from .9654 with a target of .9675 is a solid 1:1 trade. I will pass on the short from .9691 as we are showing intraday bullish action and a proximity test of this level is already in.

As always, watch the reward/risk and trade for tomorrow!

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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