GBP/CHF has been in a steady uptrend as the U.K. recovers from the pandemic. Is there still an opportunity to play the rally?
GBP/CHF Uptrend Play?
On the four hour chart above of GBP/CHF, we can see the pair has been in a steady uptrend in February, likely on positive vibes on the British pound as covid cases have steadily been falling in the U.K., bringing the government close to exiting lockdown protocols.
Unless that situation turns around dramatically, it’s likely the British pound’s rally will continue to have legs, especially if international trade continues to recover from Brexit imposed challenges.
Looking ahead, we’ve also got potential catalysts for Sterling this week on the economic calendar, most notably the upcoming read on U.K. inflation, as well as flash PMI data from the U.K.
As far as the Swiss franc, with no direct drivers on the calendar from Switzerland ahead, it’s likely the franc will mainly be influenced by broad risk sentiment and likely moves in the euro. So, it’s possible the upcoming flash PMI numbers for the eurozone may play a factor in Swiss franc price action this week.
So, if broad risk sentiment continues to remain positive on recovery / stimulus hopes, traders will likely stay bullish on GBP/CHF this week. And if we get positive reads from the U.K., the rally could pick up steam to the upside. Look out for bullish reversal patterns at the rising ‘lows’ trendline marked on the chart above if the pair pulls back this week. That may draw in short-term to swing buyers.
On the other hand, the upside breakout may not produce a big enough pullback, so going in at market and/or scaling down from current levels to the rising trendline is an entry strategy to consider for more aggressive traders.
For the bears, the odds are low at the moment for a successful short play on GBP/CHF until we get a strong shift in global risk sentiment AND bearish news from the U.K. regarding the lockdown end date and or Brexit-related business/trade issues. If that scenario plays out this week, look out for a break below the rising trendline before considering a short position
What do you all think? Are you watching GBP/CHF for a potential long play? Or do you think the rising ‘lows’ is set to break? Let me know in the comments section below!
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