GBPCHF's Hurdle at the support: Bullish Reversal or Further Downtrend?
07 August 2023
Today's technical analysis draws our attention to the British Pound and the Swiss Franc currency pair, which was recently subjected to an intriguing dynamic. The key feature to note here is that GBPCHF has, for a considerable period, been ensnared within a sideways trend. This has been cordoned off by the blue resistance at the top and green support at the bottom, as clearly demarcated in our chart.
In June, the currency pair experienced a bounce off the resistance, embodied by a head and shoulders pattern, delineated in yellow on our chart. This technical pattern, often indicative of a bearish reversal, gained significance when, in July, the price broke the neckline of this formation, leading to a strong sell signal.
However, the latter part of July revealed an interesting turn of events. As the GBPCHF attempted to breach the green support, it was repelled, resulting in a bounce. This scene was repeated at the start of August, with a subsequent bounce currently underway.
The inability of the currency pair to break through the green support could potentially be read as a bullish sign. If the day concludes relatively high, and a bullish candle is formed, this could be taken as an auspicious signal to buy, with an anticipated trajectory towards the blue resistance.
On the flip side, should the bearish pressure continue to mount and the price remains in the vicinity of the green support, the likelihood of a breakout increases, which may translate into a possible sell signal. Therefore, keen observation of the market is advised in the coming days to identify and react to the emerging trend.