The GBP/CHF pair has been rallying lately, but as you can see stalled during the Thursday session as we formed a long legged doji. This neutral candle signifies that we are starting to lose a little bit of momentum, and on top of that, it is the same area that the last pullback sent us plunging down towards the 1.3950 level.
Adding to the potential selling pressure is the fact that we have stopped at the 50% Fibonacci level. On top of that, you can see that I have plotted the 100 day exponential moving average on the chart which is just above current price. When you see this many factors line up in a row, you have to stand up and take notice.
Friday was the Good Friday holiday, so the liquidity just wasn't there. However, I cannot help but notice that even the low liquidity environment produced a negative candle. I believe that if we can break down below the Thursday candle's range, he could see a bit of a selloff in this pair. This would make sense to me over the long-term, as the British pound has been absolutely pummeled against most currencies lately.
Bank of England
The Bank of England has a new monetary policy meeting on Thursday, so this of course could have a great effect on this pair. It doesn't matter to me really though, as I think the United Kingdom is going to suffer through recessionary headwinds for the near-term anyway. Far as I'm concerned, the trend is down and unless we managed to break up and above the 1.45 level on a solid close, I cannot look at this chart in any other way.
Following the trend certainly won't save a lot of hassles, and it also gives us a much clearer picture of where to go. I believe this pair is heading back towards the 1.40 level eventually, although judging by the recent action, we could have a bit of choppiness on the way down to that point. However, we do manage to get above the 1.45 level with a solid close, it does look like we have a little bit of an air pocket all the way to the 1.47 level