The GBP/CHF pair continued to bounce off of the 38.2% Fibonacci level during the Friday session as the market is trying to catch its footing. The Swiss franc continues to look soft overall, and as a result I am thinking it is only a matter of time before all of the XXX/CHF pairs should continue going higher. (With perhaps the exception of the EUR/CHF pair.)
The 1.42 level is also supportive as well, and this should continue to be a place where the buyers get involved again and again. This market tends to follow risk appetite, as it will go higher when stock markets do as well. This isn’t always the case, but can be a bit of a peripheral indicator of where we are going.
The area that we are trading at in the current moment is a bit of a “dead spot.” In other words, the markets seem a bit comfortable in this region. The markets will eventually have to make a decision, and then will eventually move in an impulsive manner.
Watch the overall markets
I believe that the stock and commodity markets could be the “tell” on this pair. However, don’t get too worried about it, but think of it as a tertiary indicator for this market. The truth is that there are a lot of moving parts when it comes to the Swiss franc, and even the British pound. The Franc continues to be sold off overall, so we could get a move higher in sympathy with the other markets. However, pay attention to what the GBP/USD pair does. The pair has somewhat stabilized – at least in relation to the EUR/USD pair. In other words, we could see this pair go higher simply because the EUR starts falling against both the USD and CHF currencies. The Swiss National Bank may also get involved – I rate that as about a 10% chance presently, but if we were to suddenly see the Franc appreciate, the chance of this could go higher. Stay tuned.
