By: Mike Kulej
During the past few weeks, the Swiss Franc saw a big inflow of funds. Analysts connect it to investors seeking a safe haven due to events in the Middle East and North Africa, as well as the earthquake in Japan. Whatever the reason, the fact is that the CHF had a strong surge.
In case of its cross with the British Pound, this translated into 1400 pips move. The GBP-CHF sold off rapidly from 1.5690 to just under 1.4300, before rebounding slightly late last week. This pair closed at 1.4755 on Friday.
A Look at the Intermediate Term Chart
On the intermediate term chart, the price action can be capped with a nicely developed trendline, which strongly approximates the path of the 100 SMA. Both of them provide resistance, which, so far held all attempts to rally. Right now, the GBP-CHF is testing the trendline again.
Coincidentally, there is another resistance in that area – a minor high at 1.4825. For the price to reverse, it must break above all three obstacles. If that happens, the GBP-CHF should rally to 1.5200 or so. Otherwise, a retest of the 1.4300 low is very likely in the near future.