- During the trading session on Thursday, we have seen the British Pound pulled back slightly against the Swiss franc, as the 1.14 level is a major barrier.
- The barrier is a large, round, psychologically significant figure, and an area that’s been important multiple times.
- With this being said, I think it’s worth watching this GBP/CHF pair because it could very well kick off the next big move just waiting to happen in the Forex markets.
Technical Analysis
The technical analysis for this pair obviously is somewhat sideways over the last several months, but it also looks more positive over the last several weeks. All things being equal, I think the shooting star from the previous session on Wednesday is worth paying close attention to, and if we can break above the top of it, we can continue to go much higher. At point in time, the market is likely to continue to see momentum pick up if we do break out, and at that point I would also anticipate that the “measured move” should open up the possibility of a move to the 1.16 level before it is all said and done.
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If we were to break down from here, then the market is likely to continue to see the 1.13 level as potential support as it is not only a large, round, psychologically significant figure, but it is also where the 50 Day EMA currently resides. With that being the case, I think you have a situation where traders will probably look at this through the prism of “buying on the dip”, as the Swiss have already cut interest rates by 50 basis points of the last meeting. This does show a little bit of panic, and therefore it makes a certain amount of sense that the Swiss franc continues to be unloved. However, that doesn’t necessarily mean that we take off right away, so I am open to the idea of buying at lower levels.
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