By: Mike Kulej
The British Pound-Swiss Franc pair is once again testing the all time low. Only about three weeks ago, it seemed that this cross might be on the verge of reversing the long-term downtrend – it advanced about 900 pips and tested the minor high at 1.5200. Since then, however, the price collapsed again, falling to 1.4301.
This is only a few pips away from the all time low for the GBP-CHF, established in March at 1.4291. Incidentally, the general 1.4300 level has proven to be very difficult to break and it appears to be holding now as well. The current daily candlestick is taking on a shape of a “hammer”, a reversal pattern that suggests a correction within the current trend. Here it means a possible bounce. Of course, this daily candlestick is not complete yet and could change before the day is over.
At present most of technical indicators are either oversold on this time frame, like the Stochastic, or in a divergence with the price, as the MACD is. This supports a possibility of a bullish correction, in a range of perhaps 300-400 pips. After that, however, if the price returns to 1.4300, it could easily make new high. The more times a specific level is tested, the more likely it is to give way on the next attempt. In case of the GBP-CHF that would mean a new all time low.