Keep Short GBPCHF After Test Of 18 Month Trend

[B]My picks:[/B] Short GBPCHF
[B]Expertise:[/B] Combining Money Management with Fundamental and Technical Analysis
[B]Average Time Frame of Trades:[/B] 3 days - 1 week

Risk appetite has seen significant volatlity over the past week; but direction has not followed as readily. Last week, my sights were set on GBPCHF as it tested a first round of resistance around 1.7350. When approaching this pair, there was notable event risk on the docket; but the UK-specific data was not considered a viable threat to a major breakout or reversal. The same could be said about the general cut of the broader event risk and its influence on risk appetite. With technical overhead building, it was becoming less and less likely that we would be able to reach the more established level of resistance around 1.75. Therefore, I decided to enter at 1.7335.

Looking at price action over the past 24 hours, we saw GBPCHF rally to in fact test the resistance I was initially interested in (the long-term falling trendline going back to October of 2007). However, placing my stops at 1.7535 would pay off. A sharp reversal in the transfer from the European to US session would put my position back in the money. Long-term this reversal is good confirmation of the trend and pivot (that marks former support back in Oct and November and new resistance since the beginning of the year). As such, I will stick with this trade - though risk of a breakout is growing. From a technical standpoint, the steady rise in daily lows over the past three weeks continues. From a fundamental standpoint, risk appetite is steadily advancing with a volatile chop. My half-sized positions help to reduce my exposure; but I need to keep vigilent. If we cannot produce a new daily low either today or tomorrow; I may consider closing out of this position before the weekend liquidity drain.