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Is a Bull Break in GBP/CHF Imminent?

28 May 2009

GBP/CHF is one of the cross rates that we don’t cover in the FX Trading Guide so this isn’t an ‘update’. However, there are at least four technical levels now converging on current price action, making this an interesting situation – a break above these should be a clear bullish medium term sign.

WEEKLY CHART: On the Weekly chart two resistances of note are the falling resistance line and 23.6% retracement of the 2007-09 fall at 1.7440. This latter has already proved effective in Feb. A weekly close above these would be the initial trigger for a push onwards to the next retracement of 1.8880 38.2%. Also see Daily chart…

DAILY CHART: In the same area, on the Daily chart two resistances of note are the area of previous Nov-08 low/Feb high (1.7422/1.7479) and 38.2% retracement of the May/Dec-08 fall. We think a close at/above 1.7500 should be significant. But there is already a s/term bullish case following the recent close above falling resistance. An initial target would be 1.8200, a Fibo projection, but the strength should be there to push higher in due course. The risk to a bull scenario looks clear – a close back below the 1.6619 24-Apr low (which also breaks rising support) would encourage the bears.

After a close above 1.7500 it is buyers choice whether to wait for a possible dip or not, but note that falling old resistance/return line near 1.7200 just now – entry may in any case be favoured above this (with initial stops ideally below that 1.6619 low).

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