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Recent U.K. election polls dragged GBP/CHF down to a nice retracement area. Can pound bulls extend the pair’s uptrend?

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What to Watch: GBP/CHF

GBP/CHF 1-hour Forex Chart
GBP/CHF 1-hour Forex Chart

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.

Not sure how big your stop losses should be? Here’s GBP/CHF’s average hourly volatility for the past 30 days: