The GBP/CHF pair has been very impulsive to the upside recently, and as a result I think that we are trying to build up enough pressure to finally break out above the 1.55 level. Unlike some other Swiss franc related pairs, this one is about to wipe out the entire loss after the currency peg was abandoned last year. That’s a significant sign, as it should leave the rest of the Swiss franc related pairs in the same direction.
The fact that the final week of November ended up forming a hammer is not lost on me, I feel it’s only a matter of time before we do continue to the upside. If we can break above the recent high, I feel that this market will probably try to reach the 1.58 level, and then the 1.60 level. The Swiss National Bank continues to work against the value of its own currency, so I believe that it’s only a matter time before this happens and it makes a lot of sense to me. In fact, this is one of my favorite trade right now because the GBP/CHF pair tends to be one of the more volatile ones out there so when you are correct, you are very correct.
Buying Pullbacks
Not only am I buying the breakout, but I would also buy pullbacks going forward as it should represent a bit of value when it comes to the British pound. It’s only a matter time before the buyers reenter the market any time we pullback in my opinion, and I think that there is essentially a “floor” in this market below, somewhere near the 1.53 handle. There is most certainly one of the 1.51 level that extends down to the 1.50 level as far as I can tell. In other words, this is a “buy only” market for the month of December and beyond. I believe that we will see significant gains not only this month, but well into the new year.
