Swiss Franc Smacks the Greenback. Shooting Star Candle Follows Through With Aggressive Selling

Hello, fellow traders! There was a beautiful opportunity to short the USD/CHF on Wednesday evening. I hope you had a chance to take a trade here, as the shooting star daily candle followed through with some really decent selling on Thursday.

If you’re maybe wondering why I didn’t write about this setup, well, I didn’t write on Wednesday evening. It was my wife’s birthday and I took her to a fancy restaurant for dinner. But if I had written, I would definitely have suggested selling this pair. Luckily, I checked out the charts before I went to bed, and managed to take advantage of this incredibly attractive technical setup on the USD/CHF. Let’s look at a few charts, and of course, a live trade example…

USD/CHF – The Bulls Are Scattered!

USD/CHF Daily Chart

USD/CHF Daily Chart

This shooting star, or pinbar candle, was the perfect trigger for a short trade. I entered about 30 minutes before this daily candle closed, with a stop loss of about 35 pips, and a target of about 157 pips. That gives me a reward potential of almost 4.5 times the initial risk.

You may have noticed that I didn’t place my stop loss above the wick of the shooting star candle like most traders would normally do, but rather in the middle of the candle, as you can see in the chart above. This is an aggressive way to trade, and the tighter stop loss allows for a larger position size which makes the potential return much higher. I use four different brokers for fund management purposes, and I traded the same setup with wider stop losses on some of my other accounts. Here is an example:

USD/CHF Daily Chart – MT4

I used a 67 pip stop loss and a 165 pip target. This gives me a possible reward of about 2.46 times my initial risk, which is really good, although the first trade I mentioned is much better, of course.

It is time for me to move all of my USD/CHF trades to break-even now. These trades have worked out very well so far, and I don’t want to leave too much risk on the table just in case we get a massive reversal before the targets get hit.

USD/JPY – Turning Lower As Well

USD/JPY Daily Chart

I personally thought the price would stay afloat above the 20-EMA, but the bears are clearly not going to allow that.

As you can see in the chart above, the price closed convincingly below the 20-day exponential moving average today. This could open up the way for more downside in the next few trading days. Let’s see what happens, perhaps we can snatch a neat short entry on a retracement of Thursday’s decisively bearish candle.

Gold – Powering Higher

Gold Daily Chart

The gold price is still moving higher. The recent correction caught out a couple of traders who got excited about selling into the dip. The safest way to trade the markets is to trade in the direction of the prevailing trend. At the moment there is strong bullish momentum on gold, and the fact that the price has been holding above the 20-day exponential moving average for so long proves it.

Wednesday’s candle printed a perfect bullish rejection off of the 20-EMA. This offered a great opportunity to enter long – I hope you seized it! If you haven’t, don’t worry. Perhaps we’ll get some more buying opportunities tomorrow or during next week.

That’s all for now, guys, good luck with your trading!