The USDCHF, often called as the “Swiss” is the fifth most popular trading instrument. It is often considered as the safe investment due to the strength and nonpartisan character of Switzerland economy. Out of every major pair USDCHF has earned its name as strong trending pair. The prevailing trend in this pair exist more than two months at least with strong momentum in the direction of the trend.
USDCHF daily chart
Figure: USDCHF daily chart trading strategy with ADX and Momentum indicator.
In the above figure, the price formed a bullish morning star pattern right at the support zone. The trader then waits for the ADX indicator confirmation. Last but not the least, the trade is only executed with the rising momentum of the pair.
Trading condition and entry signal
This trading strategy is based on trading with the current trend. Though it also acts as a reversal pattern for the USDCHF daily chart but the best result is found when traded in the direction of the recent trend.
Trader identifies the potential support and resistance zone of the pair for taking high probability trade. The support or the resistance zone should be tested at least twice.
After successful identification of support and resistance level trader then look for price action confirmation signal at the support zone for uptrend and at the resistance zone for the downtrend.
A trader looks for crossover in the ADX indicator for taking their trade. When the green line is above redline it indicates possible uptrend scenario and when the green line is below redline, it indicates a downtrend.
In the momentum indicator, there should be clear indication of rising momentum before taking the trade. Without clear indication, the trade is not executed.
Stop loss should be set just below the support level for bullish trend and for the bearish trend it is set just above the key resistance level.
A trader should use trailing stop loss and maximize their profit while trading with this strategy.