By: Bastian Rubben
The US stock market is back from the Thanksgiving day with what seem to be as a happy mood, as indices are rising more than 2%. The reason why Wall Street is interesting to the Forex trader is the fact that the USD has a negative correlation to the US stock markets, so it is necessary to monitor the major indices most of the time.
The fact that Wall Street shed so many points during the recent weeks gave the American dollar a significant push against most of the currencies, including the CHF. When the pair set the bottom at 0.86 on the end of October, I estimated that eventually it would rise to 0.93 and complete the "cup & handle" pattern under the resistance at 0.93. Therefore, I started looking for potential entry points along the way up, in order to get in to the market before everybody does, and get out when everybody thinks it is a good idea to join in.
Experienced traders already know that most of the amateurs set their automatic orders above 0.93 in case of a break-up. I expected that since the USD was about to correct against all of the currencies, the pair would probably make a false-break and shake the amateurs out before it continues rising. My assumption turned to be true and the CHF started strengthening at the moment the pair reached 0.93.
My trade-idea, which I published two-weeks ago, was to buy the pair when it was traded around 0.915. Those who implement this trade-idea are now avoiding stress and inconvenience, and they can manage their trade properly. However, those who entered at the pick, have already lost 150 pips and probably closed the losing position, in spite the face the general trend is an uptrend. So be aware of going in the markets on traps.
