The GBP/CHF pair fell on Friday, pulling back to the 1.4629 level. However, there is a little bit of a precedence for this area to be supportive based upon earlier in the month of December. The choppiness that we saw back then should offer support to the buyers, and as a result I am interested in buying this pair on supportive looking candles, probably off of the hourly chart.
The reason I am looking to the hourly chart is that there won’t be much chance of massive moves on the daily timeframe due to the holidays. However, I think it is obvious that from the Wednesday session, the momentum has definitely shifted to the upside overall. That impulsive candle suggests that there was a sudden flood of money into the British pound, thereby increasing the likelihood of this market trying to reach the 1.49 level again.
“Risk on, risk off.”
One thing you need to know about this pair is that it is extraordinarily sensitive to the risk appetite of global markets. After all, the Swiss franc is considered to be one of the safest currencies out there, and while I believe that the British pound is a completely safe currency to own, the markets do tend to think of it as a bit “riskier” than the Franc. That being the case, it’s a matter of relative safety, and as a result I think as world stock markets continue to gain, this pair should as well.
On top of that, the British pound itself has been extraordinarily strong recently. Even though it is sold off slightly against the US dollar in the last couple of sessions, it should be said that on a relative scale against most other currencies, it has held its own quite nicely. Because of this, I see no reason to sell the British pound at all, and certainly not against the Swiss franc which is starting to we can slightly against the US dollar. That being the case, I believe buying pullbacks in this pair the show signs of support on the shorter-term charts will be the way to go.
