GBPCHF Update: Exploring the Probability of a Bearish Breakout in the Sideways Trend
20 July 2023
In today's technical analysis, I would like to revisit GBPCHF (British Pound vs Swiss Franc) and provide an update on the current situation. In our previous analysis, we identified a head and shoulders pattern (marked in yellow) that was forming within a long-term sideways trend, represented by a rectangle pattern since October 2022. We highlighted the significance of the pattern's neckline (marked in black) and the mid-term uptrend line (marked in red).
Following the breakout of the neckline and the mid-term uptrend line, the price experienced a sharp decline. Today, it has reached a key horizontal support level, represented by the lower line of the rectangle pattern. At this point, we face the question of whether we will witness a bounce or a breakout from this support level.
Considering the current scenario, we can explore two potential scenarios. If the price demonstrates a bounce, characterized by a hammer candle or a bullish engulfing formation, it could present an opportunity to open a long position. On the other hand, if the price closes a day below the blue area, indicating a breakout, it may be worth considering a short position.
Based on the current situation, the probability of a downside breakout appears more likely. While it might not occur immediately, I believe it could be a potential plan for July.