Recent U.K. election polls dragged GBP/CHF down to a nice retracement area. Can pound bulls extend the pair’s uptrend?
Fresh Market Headlines & Economic Data:
- U.S., Canada and Mexico sign agreement – again – to replace NAFTA
- China sees US delaying Dec 15 tariffs, trade adviser Navarro disagrees
- Westpac: AU consumer sentiment still falling
- Big Japanese firms’ sentiment worsens to 3-yr low from Oct to Dec
- Japan producer prices up in November
- UK’s Johnson on track to win only modest majority – YouGov
- Japan’s government expects tax revenue to undershoot by around 2.3T – 2.5T JPY in current FY
- New Zealand government unveils $12b infrastructure boost, much of it focused on roads and rail
Upcoming Potential Catalysts on the Forex Calendar:
- U.S. CPI numbers at 1:30 pm GMT
- EIA’s weekly crude oil inventories report at 3:30 pm GMT
- FOMC’s policy statement, projections, and presser at 7:00 pm GMT
What to Watch: GBP/CHF
A report by closely-watched pollster YouGov showed Conservatives narrowing its lead to 28 seats, down from 68 two weeks ago. Given the “downtrend” and margin of error, YouGov says they “cannot rule out a hung parliament.”
The release was enough to drag GBP/CHF to the 1.2925 area, which lines up with a 50% Fib retracement and 200 SMA support, as well as previous channel resistance and previous area of interest back in November. The cherry on top is a bullish divergence on the 1-hour chart.
MarketMilk’s signal is pointing to a “bearish” trend on the 1-hour time frame. However, adjusting the setting to the DAILY time frame shows that the longer-term “bullish” trend is still intact.
A long trade aimed at the 1.3050 levels with your stops just below this week’s lows could give you a good reward-to-risk ratio. Don’t discount the possibility of a “buy-the-rumor, sell-the news” situation, though, as well as a bit of profit-taking ahead of the actual election.