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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!