Adam Button commented that Credit Agricole is suggesting buying dips in sterling, and specifically mentioned buying against the CHF.
So what do the technical charts say?
Like the EURCHF, the GBPCHF has seen a fall of late from stock market/Ebola fears and the flight into the safety of the CHF. The GBP overall has not been doing that great lately and that too has pressured the pair.
GBPCHF found support at the near 200 day MA and 50% retracement.
From a technical perspective, if you look at the daily chart, the price tested and found buyers near the 200 day MA (green line in the chart above) and the 50% of the trend move up from the 2014 low (reached in March) to the high reached on October 1, 2014. The correction also tested the low from last month. That was a great hold. It is no wonder that Credit Agricole sees higher prices.
If I were to blur my eyes, I swear I can also see a head and shoulders in the future. We just need to build that other shoulder ; ) In other words, go higher.
The price action today has been able to move above the broken 38.2% of the move up from the year range at the 1.5126. This is now support for the pair on this chart. Patient buyers should show up against this level as the new day begins. .
Looking at the hourly chart, the price cracked lower yesterday and accelerated the declining trend. Today, the price extended back above the broken trend line (blue circled numbers) and then another trend line connecting highs (see green numbers). This too is a support level that if held, would keep the buyers content. A break, back below the trend line, and I would begin to wonder if something else is up (RISK level).
The price has been going more sideways in the NY session but is closing at the highs for the day (see yellow area). The next upside target is to get above the 38.2% and the 100 hour MA (blue line) at the 1.51983 and 1.5205 levels A break of this should open the pair for further gains. Other upside targets, if the the trend stays positive, will be to look toward the 50% and the 200 hour MA (green line at 1.5300). If there is a test of the 200 hour MA, I would expect sellers lining up on the first test.
Overall, I like the move higher today and the support that held at the lows. Buying a dip near the 1.5126 area allows traders to use the trend line on the hourly chart to define and limit risk. Aggressive buys from here would look to potentially risk more. Look for the correction in the new trading day.
GBPCHF has stepped higher today.
