Jobs figures are up for release from the U.K. in the upcoming trading session, so I’m watching this textbook retracement play for a potential bounce.
Fresh Market Headlines & Economic Data:
- China to grant tariffs extension on additional U.S. goods
- Stocks and commodities still shaky on coronavirus demand impact
- Apple warns it probably won’t meet sales forecasts this quarter
- RBA meeting minutes: Extended period of low rates required
Upcoming Potential Catalysts on the Forex Calendar:
- U.K. jobs figures at 9:30 am GMT
- Euro zone and German ZEW economic sentiment indices at 10:00 am GMT
What to Watch: GBP/CHF
Sterling could be in for additional volatility as the U.K. jobs figures are due and might set the tone for BOE policy expectations.Analysts are expecting to see a 20.2K increase in claimants for January, higher than the earlier 14.9K gain in joblessness. Wage growth could also slow as the average earnings index is slated to dip from 3.2% to 3.1%.
If the actual figures beat expectations, however, it could spark a strong bounce for pound pairs as this would likely dampen BOE rate cut hopes.
I’ve got my eyes on this break-and-retest setup on the 1-hour chart of GBP/CHF. The pair is inching close to the 38.2% Fibonacci retracement level, which coincides with an area of interest around 1.2730 and the 100 SMA dynamic inflection point.
The faster-moving MA is above the 200 SMA to indicate that support is more likely to hold than to break. Also, stochastic is indicating oversold conditions or exhaustion among sellers, so buyers might take over soon.
If you think that a bounce is about to happen, make sure you look at the average daily volatility of GBP/CHF before setting entries and exits: