The GBP/CHF pair initially tried to break out during the session on Friday, but struggled at the 1.4650 level yet again. This is an area that has now been tested 3 times, and as a result it appears that the market is going to continue to consolidate overall. With this, we will more than likely head back down to the 1.45 handle, and then the 1.43 level. Although I prefer the British pound over most currencies right now, the truth of the matter is that the market looks very locked at this point.
I think that eventually we will break out to the upside, but the Swiss franc is fairly strong at the moment against quite a few currencies. This might not be the best way to play the British pound, although I really like the idea of going long of the British pound against most currencies. With that, I think that perhaps selling is possible, or at the very least you need to avoid this pair if you subscribe to the same thesis that I do: that the British pound will continue to outperform most of the market.
Nice rectangle
This rectangle is fairly obvious, and that’s exactly what I like seeing when I place a trade: dead obvious positions. It’s obvious to me that there are plenty of sellers near the 1.4650 level, and that there are plenty of buyers near the 1.43 handle. With that, I think that it’s only a matter time before we see buyers once we break down a bit, and that the 1.45 level is essentially the “middle ground” as the market continues to bounce around.
So it’s really up to you, depending on what it is you believe as far as time frames are concerned. I think that this market probably does break down but I also recognize that it could be a bit of a choppy move. Regardless though, a move above the top of the range for Friday would be very bullish as far as I can see, and at that point in time I would be a buyer and aiming for the 1.50 level as it jibes well with my overall thesis of British strength.
