GBP-CHF Rally Has Stalled

By: Mike Kulej

After reaching the all time low of 1.4398, the GBP-CHF has rallied strongly. In a relatively quiet way and not getting much attention, this pair advanced 1000 pips since the start of the year. This move could be a start of a major, long-term reversal.

GBP-CHF Forex analysis January 24, 2011

For now, however, the GBP-CHF settled into a narrow trading range. It is typical after a move of this magnitude, especially one without a correction, as it was the case here. At the moment, the market is indecisive about its next course of action.

The consolidation area is contained between 1.5195 and 1.5428, a tight zone that is unlikely to hold for much longer. Given the fact that the preceding advance did not have any pullbacks to speak off, a correction of some magnitude seems to be in order here.

A break under 1.5190 would signify that a correction is under way. It could easily take the GBP-CHF to 1.4880 area. That is where a past important resistance was located, which is likely to become a support now. Alternatively, breaking above 1.5428 would resume the uptrend, but a correction is more likely at this point.

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