GBP-CHF at a Possible Reversal Zone
By: Mike Kulej
The Pound-Swiss Franc pair has been flying under the radar screen of media, with most attention given to the EUR-CHF and the repetitive SNB interventions that targeted that cross. Unlike the Euro-Franc, the GBP-CHF did not make new all time low and perhaps that is why it lacked the coverage.
Just like most of the CHF pairs, this one also rebounded sharply in recent weeks. The GBP-CHF rallied from 1.5850 to 1.6560, breaking several resistance levels in a process. This strong move established a prevailing bullish trend, at least on the intermediate term chart. In this content, the recent swing from 1.6560 to the current level 1.6230 should be viewed as a correction within the main up trend. If this is the case, than a bullish reversal could follow soon.
Very often, the corrective phases of market moves end when the price reaches either 50% or 62% Fib retracement level. The GBP-CHF is right at the 50% level now. At around 1.6160, this chart also shows a confluence of past supports and resistance levels, suggesting a possibility of strong support there.
The Stochastic Indicator
The Stochastic Indicator is at an oversold level, providing additional bullish clues. Put together, it is not unreasonable to expect a reversal at the general 1.6150-1.6250 area. Emergence of a strong bullish candle, like a hammer or an engulfing line, should be seen as an entry event. If that happens, the GBP-CHF could rally back 1.6560 on the intermediate term bases.