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Implementing My Long-Term Dollar Trade with USD/CHF Sell

February 14, 2017 (Last updated on November 12, 2018) by

If you remember my June post about the long-term future of the US dollar, you know that I am bearish on the USD for the coming months based on a set of fundamental reasons. And the optimal way of trading this sentiment is going short USD/CHF. Today, I am going to set up the stop order for entry into this position. I will also explain some other factors that strengthen my bearish view on USD/CHF.

The main reasoning (except for the USD-bearish factors listed in the above-mentioned blog post) for this trade is that the Swiss franc is a good candidate for buying against the dollar from the fundamental point of view. Switzerland demonstrates moderately high GDP growth compared with the rest of Europe:

Switzerland - GDP Growth by Quarter - Q4 2013 - Q3 2016

The CPI inflation rate is also returning to the normal values:

Switzerland - Inflation (CPI) - Monthly Changes from Year Ago - February 2016 - January 2017

At the same time, the country’s foreign exchange reserves continue growing, signaling about an active intervention policy conducted by the Swiss National Bank to keep CHF from appreciating:

Swiss Foreign Exchange Reserves - January 2016 - January 2017

From the technical analysis point of view, the monthly chart is currently showing a rising wedge spanning from the early 2011. It was violated only twice — with huge downward spikes caused by the SNB’s manipulation. The entry can placed at a safe buffer distance below the lower border. The one on the chart (the cyan line) uses the 10% of the wedge’s height at the base as the buffer distance. The take-profit can be placed at the obvious support level at July 2011 low.

Using Long-Term Wedge on the USD/CHF Monthly Chart to Short US Dollar

One of the major problems with this trade is the unfriendly swap. However, the trade will only open after a breakout — when the bearish trend becomes prevalent. Hopefully, my take-profit will be reached rather soon after that. The lowest negative swap on USD/CHF that I was able to find is at InstaForex — it is -$1.90 per standard lot per day.

I will keep this post updated regarding this trade’s progress.

Update 2017-07-01: Actually, my pending order entry has triggered on June 29 at 0.9560 with stop-loss at 1.0099 and take-profit at 0.7851.

Long-Term Wedge on the USD/CHF Monthly Chart - Post-Entry Screenshot

Update 2018-11-12: The multi-month journey ended today as the US dollar’s strength continues to prevail versus persistently weak Swiss franc:

Long-Term Wedge on the USD/CHF Monthly Chart - Post-Exit Screenshot

If you have any questions or comments about this long-term short position in USD/CHF, please post them using the commentary form below.

2 Responses to “Implementing My Long-Term Dollar Trade with USD/CHF Sell”

  1. Peter

    Hi CMSTrader do not have any swaps at all no matter how long you leave the trade
    Cheers peter


    Andriy Moraru Reply:

    Are you sure? From what I’ve read on their website, they have Islamic accounts for no-swap trading.


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