Forex Technical
USDCHF Finds Congestion
May 13, 2010
Gary Fichardt - FxBigDog
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Chart Analysis
The USDCHF has been range bound for the last 24 hours. Although the daily chart suggests bullish direction, the lower time frames could see some short-term bearish or sideways movement before taking off north.
What is important when trading consolidation is trying to find the right place to entry and where to place your protective stop.
Once you have find the top and bottom of the range, entries and stops should be place outside the range to make sure that they do not get whip lashed in and out of the market by volatile price action.
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Analysis
There are two times when traders will normally find congestion in the market. When there is a fundamental announcement release due that is a key factor to the market, for example the Non Farm Payroll in the US or the range is due to low liquidity in the market, which can occur through the Asian trading session when most of the major markets are closed.
The market consolidates 70% of the time and trends 30%. With that been the fact, we see more and more traders trading the consolidation breakouts. For a day trader or scalper, it might be more favorable to trade the breakouts at the start of the European session around 2am EST. MTI has find a successful strategy they teach their students to trade that helps them take profit in this market.
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