Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/GBP ahead of the European Central Bank’s latest monetary policy statement, so be sure to check that out to see if there is still a potential play!
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DJIA: 28089.99 +0.54%
US 10-YR: 0.713% +0.01
Bund 10-YR: -0.433% +0.027
UK 10-YR: 0.244% +0.006
JPN 10-YR: 0.026% +0.005
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Gold: 1972.00 +0.87%
Bitcoin: 10453.75 +2.62%
Ethereum: 374.57 +6.74%
Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
What to Watch: GBP/CHF
On the four-hour chart above of GBP/CHF, we can see the drop in Sterling picked up speed over the past few sessions, including today where it was enough to easily break through the major support area around 1.1750.
This move has been fueled by the increasingly tense drama over Brexit between the EU and the U.K., and today’s fast run lower beyond support was likely sparked by the Swiss franc, which seems to be running higher with the euro after the ECB refrained from jawboning down the recent rally higher in the euro.
So, from a technical perspective, that down move is confirmed and likely to have more room to the downside to go, but after such a big drop, it’s prudent to be cautious with entry with no major catalysts ahead to push the pair lower at a fast pace.
If you’re a bear on the pair, consider waiting for a bounce to the broken support level before shorting, or scaling into a short position to limit your risk and build a position at a better price.
For the bulls out there, there’s no argument at the moment for a long position, other than potential profit-taking at these extended levels. Even then, it’s probably best to wait for bullish patterns to form, preferably on a retest of the next support area around 1.1650.
It’s also likely you’ll need a fresh catalyst to get traders to drop their bearish Sterling bias, so be on the lookout for headlines showing the EU and U.K. more willing to work with each other on Brexit.