Usd/Chf: Shooting Star

There is a shooting star candlestick formation on the daily chart on the Usd/Chf. This candle signal indicates that buyers have temporarily run out of steam on the daily chart. If the current candle closes lower than the previous candle then that would be a great sell based on a price action strategy. A good place to put a stop would be above the daily high on the candle that has formed the shooting star which in this case is 1.1711. A potential target on Usd/Chf could be 1.125 because the 20 period moving average is at that current price level and many times the 20 period moving average acts as support when the price is in an uptrend.

Take a look at the daily chart to see what I am try to describe.

Daily Chart Usd Chf

Daily Chart Usd/Chf

You can see that the price has stopped its rise rather quickly and that is why the shooting star has formed. I however like to wait until the next candle closes because that is a more solid indication that the price is changing direction. Even if I have found more confirmation I still always trade with only 1% risk on any one trade. That way I can have a large amount of gains while I am limiting my potential losses. Over time using a money management style like that will produce substantial long term gains. Don’t get greedy and one way to help yourself from getting greedy is to look at the big picture. What I mean by that is try to imagine how your account will look 5 yrs from now if you follow your trading plan.

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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.
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  • http://www.winnersedgetrading.com caseystubbs

    Just an update I am currently up +37 pips on this trade and I have my stop loss at break even.

  • http://www.winnersedgetrading.com caseystubbs

    Yes, it is a personal thing I know many excellent traders that are great at fundamental information. I also know some good ones that don't. I personally lack in that area but if you ever have any good fundamental info you can share it here anytime.

  • Ron Wilson

    Hi casey,

    OK Thanks. The Line of resistance at 1.17 goes back quite a few months too, btw.

    Maybe it's a personal thing, but in an effort to try to educate myself about Forex, I'm trying to piece the 'story' behind each trade, or at least to try to understand at a general level what each trade means fundamentally. However your answer's appreciated, and I know where you're coming from because the fundamental view does seem to vary depending on who you listen to. Thanks again

    Ron

    Ron

  • http://www.winnersedgetrading.com caseystubbs

    Thanks Ron,

    Yes resistance helps add confirmation in a trade. If you have a candle stick signal and a resistance point that just makes the trade that much more attractive.

    I have not been keeping up on fundamentals like I should. I do not have a fundamental view at this point I just trade the technicals because the fundamental data is always changing and differing based on who's opinion you are getting at the moment but chart patterns will never change.

    If you have any other questions please don't hesitate to ask and please come back again.

    Thanks

    Casey

  • Ron Wilson

    Hi Casey,

    I'm new to this web site and Forex trading in general. I have a question about the USDCHF Shooting star trade.

    When I looked at th edaily charts I also saw a strong line of resistance at about 1.1700 which would support the view that the price can't break through at that point.1.1700 is also the high test point of the shooting star.

    However, what's the fundamental story behind a price retracement? The suggestion is that the USD will weaken against the CHF. I know that the CHF has been propped up by the Swiss government, but for the USD to weaken also would mean that the appetite for risk amongst investors would need to return, as money flows from the USD to stocks. As I write this there has been a bit of a rebound in the DJIA which may support this, but do you have a fundamental view to sit alongside the technical trade?

    Kind regards

    Ron Wilson (UK)

  • http://www.winnersedgetrading.com caseystubbs

    you are welcome :)

  • http://www.winnersedgetrading.com caseystubbs

    Yep I made a mistake I forgot the 1 I will fix it now.

    Thanks

  • Gerarfx

    target is at 1.125, placed at 20 simple mov average.

  • maruf ahmed

    Its a great helpfull jnformation, thanks .

  • Maria

    Casey that target seems like you are going long???????