I didn’t get the short-term pullback I was waiting for on GBP/CHF so I’m zooming out to watch this longer-term correction instead. Check it out!
GBP/CHF Trade Setup
Sterling seems to be hitting a ceiling against the Swiss franc, as price is currently consolidating below the broken support around the 1.2500 major psychological level. This is between the 50% and 61.8% Fibonacci retracement levels, which might be able to keep gains in check.
Stochastic is also turning lower from the overbought zone, hinting that sellers are taking control of price action. If this continues, price could head back south to the lows around the 1.2000 major psychological level or even until the swing low at 1.1680.
Economic data from the U.K. has been weaker than expected so far this week, with the CPI and claimant count change falling short of consensus. However, renewed optimism in the U.K. appears to be keeping the pound afloat for the time being since market watchers are starting to think that Brexit might not mean the worst for the economy.
Traders also seem reluctant to buy the Swiss franc, which is constantly under threat of SNB intervention. An SNB official has a testimony lined up today so a bit of jawboning is expected again. Because of that, I’m inclined to wait for this event risk to pass before taking any short GBP/CHF positions.
I’m seeing a tiny double top pattern on the 1-hour time frame so I’ll sit on my hands until price breaks below the neckline at 1.2350 as bearish confirmation. If I’m able to get in a short position, I’ll aim for the 1.2000 support area and set my stop past the 1.2650 level for a 1.17-to-1 R:R.
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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