EURCHF is one of the unique pairs. It's action is always interesting and regular analysis not always works on this pair. It's because Switzerland doesn't want strong Frank. Why is that? Because they export a lot and weak currency compared to others, means that products are cheaper. And we all like to buy cheaper products. So from time to time SNB (Swiss National Bank) intervenes (sells a lot of Franks, so weakens it). This is the reason why it's hard to trade on regular technical analysis. Also sometimes it's enough for rumors about intervention to come out and everybody starts to sell CHF.  Obvious and recent intervention happened at 2011 Septemper 6th. That day EURCHF pair moved ~1000 pips. Yes yes - 1000 pips in one direction and in several hours. 1 hour chart below (links to the full-sized images are listed in the end of this article).


There's also a very unique thing about this pair - SNB said that bottom for this pair will be 1.2000 and they will do everything to defend this level. I do not remember any currency pair to have a bottom. It's a very big advantage, we should use in our favor. Besides, rumors are that they will set a new bottom - 1.3000. But this is not confirmed, so we cannot trust it. So how to trade a pair like this? Is it worth trading it at all? Many of experienced traders would advise to leave this pair for gamblers. But I am not a gambler and I trade EURCHF. It's because we have a historical chance to earn a nice amount of money. In this article I will propose a EURCHF trading methodology and how I traded it last weeks.

1. Find support/resistance/magnet levels

First we have to find levels where price liked to stay for a while, or has a fast reaction from. We need these levels to plan our trade entry and take profit.
These levels are easy to see in lower time frame charts. I like 1 hour chart and 1 minute chart as confirmation. I will give as example of 1.2130 level.



First reaction we had at October. As we can see from the chart price spent some time around here. And bounced from this level many times. It meant  that it is important level.



Later, at November (almost exactly after one month) price came back to this level. And surprise surprise we had been watching the same action. This gave a very good chance to enter LONG position.



If we switch to one minute chart, we can see how price reacts in short time frame. Very clearly we can see, that price is trading in a tiny range and bounces fast from our level. Also on 1 minute chart price movement is "choppy". This means that market gets offers and buyers are buying a lot at this price. And that buyers are absorbing all sell orders. I have to mention, that in a regular analysis these buyers and sellers have the same chances to win, but on EURCHF we are counting on buyers.
So levels are found according to: 
- how price bounces, 
- how much time price spends near that level,
- "choppy" price movement.
We find these levels and plot them on a chart. These levels should be in 50-100 pips distances from each other.

2. Enter a trade

We should wait for a trade patiently. Price always moves up and down, so we will always have a great chance to enter. We have to start looking for a trade when price comes back to one of our levels. We NEVER enter short position. Only LONG. 
In last 1 minute chart a great long entry is anytime at 1.2130. Below is a chart with two of my scalp trades. Later I had more positions as price came back.



But not always price moves like this. Because sometimes it's not possible to find a level which is respected by a pip. Also most levels are not respected by a pip, price tries to break below, but later finds buyers. Below is an example where price tried to break 1.2312 level.



Chart above shows that not all levels are respected by a pip. But they are respected in the end. Basically entry point can be any price, but it's easier and more logical to enter at price action levels.

3. If pair moves to a "wrong direction"

This is very important not to panic if price goes "wrong direction". This is the main thing when trading EURCHF - we have a bottom. So it means that even in a worst scenario if price reaches 1.2000 it will bounce from this level very fast and very far. So if we have a trade with loss, we do not close it, we just wait for another trade setup. Entry should be 50 or more pips from our last trade. Second or third entry should be based on the same analysis as a first one - patiently wait for a good setup. I wouldn't suggest to have more than three open trades. But it depends on money management. You will see how I ended with first bad trade in my trade example below.

4. Take profit

Take profit is a very tricky thing and it depends on personal characteristics. Some will like to scalp with 10-50 pips profit. And some will like to hold a trade and wait for 100-200 pips. I am trading like this - open 1-3 scalp trades, close them in 10-30 pips profit and if price comes back to the same level, I enter a longer term trade. If scalping take profit should be in top of the range or near next level. If trading longer term - close at next level which is more than 80 pips from entry point.

5. Money management

We have to be prepared to have a huge drawdown. And we also have to survive if our SL (stop loss), which should be below 1.2000 (1.1980 for example) is hit. We have to calculate, that we might have at least 3 trades and drawdown of first trade can be as much as 300 pips. I trade with maximum three trades and my one trade pip is worth 0,025% of my account. I wouldn't like to lose more than 10% of my account if SL is hit, but 30% is acceptable too.
Of-course there's possibility to trade with tiny enough SL, but I never investigated and analyzed trade like this.

My trade example

Below is a chart with my EURCHF trade, which went to a "wrong direction". I ended up with 326 pips in profit. I had only three trades and last trade was very low - at strong level 1.2130. Basically I had to open some more trades between 1.2312 and 1.2130. But trades were in too big loss, so I waited for a very good entry setup. I prepared one more trade - at 1.2020. But I didn't need it.



Final words

This setup is very dangerous. Because we can get a huge drawdown. And we cannot be 100% sure that SNB will defend 1.2000. They stated that will defend it. And they are defending. But economics is hard to forecast and there's many "force majeure" in market. We do not know what will happen to Euro. So be careful, manage your money.

This is just proposal and not "get rich quick" scheme. You and only you are responsible for the trades you make and profit or loss you take. This article is just to help to make your own trade strategy.

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