EUR/CHF forex momentum trade idea: How to play the long term trend decelerating higher

Introduction

VolatilityMarkets Momentum Trade Idea.

According to AQR the quantitative hedge fund and Yale University, over the past 100 years markets moved in trends. Trends are successive upwards and downwards movements in price that occur at a greater frequency than would be predicted by randomness alone. The following trade idea is a momentum trade idea which takes the assumption that the market will continue moving in the way it has over the previous sessions. momentum trading, is different than trend trading due to the time horizon of the trade as momentum trades will happen intraday or over the course of a single session while trend trading is done over the course of a week or more.

Market summary

Price

EURCHF last price was € 0.996758.

Trend analysis

In the short term EURCHF has been accelerating higher. In the long term EURCHF has been decelerating higher.

Value analysis

Over the past 20 days, the EURCHF price increased 12 days and decreased 8 days.

For every up day, there were 0.67 down days.

The average return on days where the price increased is 0.3161%.

The average return on days where the price decreased is -0.2547%.

Performance

Over the past 20 Days, the price has increased by 1.76% percent.

Over the past 20 days, the average return per day has been 0.088% percent.

Trade idea

Taking into account the long term trend decelerating higher, we propose a long trade idea with an overnight time horizon..

Trend trade idea

Buy € 681,557 EUR, or 6.82 lots of EURCHF, take profit at € 0.9982 level with 50.16% odds for a € 996 EUR gain, stop out at € 0.9953 with 50.01% odds for a € 1,000 EUR loss through an overnight time horizon.

Intraday predictions

EUR/CHF trend analysis

EURCHF last price was € 0.996758. The long term trend decelerating higher is stronger than the short term trend accelerating higher. This trade goes long when the price was moving higher but decelerating over the past 20 days.      

EUR/CHF value analysis

Over the past 20 days, the EURCHF price increased 12 days and decreased 8 days. For every up day, there were 0.67 down days. The average return on days where the price increased is 0.3161% The average return on days where the price decreased is -0.2547% Over the past 20 Days, the price has increased by 1.76% percent. Over the past 20 days, the average return per day has been 0.088% percent.

EUR/CHF worst/best case scenario analysis

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for EURCHF, is € 0.9925 , and the best case scenario overnight is € 1.001016 . levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that € 0.9953 could trade and that € 0.9982 could trade. These levels are within statistical probability

Expected Range

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for EURCHF, is € 0.9925 , and the best case scenario overnight is € 1.001016 . levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that € 0.9953 could trade and that € 0.9982 could trade. These levels are within statistical probability.

Probability Vs Payout Chart:

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

Key Takeaways:

• Price today € 0.996758.

• Over the past 20 days, the EURCHF price increased 12 days and decreased 8 Days.

• For every up day, there were 0.67 down days.

• The average return on days where the price increased is 0.3161%.

• The average return on days where the price decreased is -0.2547%.

• Over the past 20 Days, the price has increased by 1.76% percent.

• Over the past 20 days, the average return per day has been 0.088% percent.

• Over the past 20 days, The price has on average been decelerating: -0.8521 pips per day higher.

• Over the last session, the price increased by 7.27 pips.

• Over the last session, the price increased by 0.0729 %.

• Over the last session, the price accelerated by 4.36 pips.