By: Mike Kulej
So far in 2010, the GBP/CHF has remained in wide trading range, between 1.5785 and 1.7105. This is best visible on weekly charts and gives this pair an appearance of non-action. However, this congestion zone is wide enough for trading opportunities on smaller time frame charts, including the daily graph.
On this time frame, we can see the GBP/CHF testing the previous low, which was at 1.5830. Most recently, this was breached by couple of pips, with the price dropping to 1.5828. Considering how this pair has been moving lately, the chances are good for a rebound from this price level. This is supported by the MACD, which is in divergence with the price – the indicator does not show a new low reading. In addition, the daily candlesticks are showing bullish patterns.
One could speculate that the GBP/CHF is ready to return to the low 1.70’s, but it is always safer to use the most recent price swing as a guide. Here, it took place from 1.6765 to the current low. If this pair will indeed rebound, it should reach one of the Fibonacci retracement levels for the last down swing. They are at 1.6180, 1.6290 and 1.6400.
GBP/CHF Testing Bottom of a Trading Range
DailyForex.com