The GBP/CHF pair tested the 1.55 resistance region on Friday, and failed completely. In fact, this massive bearish engulfing candle almost ensures that we are going to go lower from here. As you can see on the chart, I have a red line drawn at the 1.5300 level, which I believe if we break below the pair will return to the 1.50 level given enough time. Rallies at this point in time will more than likely be selling opportunities as well, and I would not hesitate to sell the first resistant candle I see.
The pair tends to be somewhat related to risk appetite, with that going higher as risk appetite increases. Recently, we have seen stock markets around the world look a little bit soft, so it makes sense of the pair could not break out above the aforementioned 1.55 resistance barrier. As you can see on the chart, I have that level and the 1.50 level marked.
Simple consolidation
I think that this market is simply in consolidation, bouncing around in this 500 pips range. I think that it’s probably going to continue to do this but there is a little bit of an upward bias overall. At least of the last couple of years, we have seen the British pound accelerated games against the Swiss franc. It’s been a very grinding affair, but there has been a little bit of an upward tilt to it.
Furthermore, I feel that if we break above the 1.55 handle, this pair goes much, much higher. So we may need to pull back from here in order to build up enough momentum to go to elevated levels. I think we will see that eventually, but right now it’s difficult to try to start buying this pair without at least a supportive candle to keep the idea that the buyers are returning. In the meantime, I believe that short-term trading opportunity to the downside, and fully anticipate this market falling. Have no interest in buying at this point in time.
