Previous: GBP/CHF Challenging Range Resistance; Break of 1.4755 Can Open Up 1.4845 and 1.5015 (1/4)

GBP/CHF

Looking at the 4H GBP/CHF chart, the failure to sustain the break above 1.4755 and then the break below the central pivot of 1.4620 was followed eventual break of the range support at 1.4475. The momentum has turned bearish and the RSI dipped below 30 but has since failed to break above 60. The market is trading in a declining wedge, developing an extended bullish divergence. The market is bearish, but not decidedly so, and is slowing down.

Let’s first examine the bullish scenario. A break above the last high of 1.4532 bucks the downtrend and breaks above the declining wedge. If a subsequent low is also higher than the 1.4375, preferably holding above 1.44, we should be looking a developing bull cycle within a sideways market.This opens up 1.4620 pivot, after which, we look at the high just above 1.4760.

This scenario however goes against the current short-term bear trend, which may still have some room to run. Even if we do break above the wedge, if the RSI fails to sustain a break above 60, we should still look at the market with a bearish bias.

On the other hand, looking at the daily chart, we still have some room until we reach 1.4222, a previous pivot and a projected channel support. This target opens up if the market breaks below 1.4370. We should shelve the bullish outlook until then, when the daily RSI reading is closer to 40. Still for the bullish outlook to take hold, the declining wedge resistance should be broken first.

Fan Yang CMT is the Chief Technical Strategist FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.