CHF/CAD FOR POSITION TRADING

Jun 5, 2022

Hello traders. This is the CHF/CAD monthly chart. I just want to show you a potential opportunity in which long-term traders can, perhaps, establish long-term short positions. As you can see in the chart, the pair has been on an upward trend since 2007 and we can draw an upward trend line connecting exactly three touches. But the price has broken the trend line and the price is in a short-term downward trend. But be careful, we still don’t have a confirmed downward trend on the monthly chart. To confirm the downward trend on the monthly chart, we need to wait for the price to make a minimum of two lower highs and two lower lows. The first sign would be if the price breaks the most recent low of 1.2600. In that case, we would get the first lower low and more confidence regarding the bear’s long-term outlook. Of course, after that we have to wait for another lower high and lower low for confirmation and if we get this we can establish a short position. But keep in mind that this would be position trading, and in that case your stop loss would be far away, so this may not be appropriate for scalpers and day traders. Also, the realization of this scenario could take months, but it is worth monitoring. And one more thing, just because the trend line is broken doesn’t mean you should sell right now; if the higher low at 1.26 isn’t broken, we’re still in a long-term uptrend on this pair, but in a retracement mode (or sideways consolidation).
Trade safe,
Merjem

Jun 5, 2022

Note

The exchange rate is CAD/CHF, but you still short the CHF and buy CAD.