GBP/CHF price analysis: expanding wedge highlights a bullish bias
GBP/CHF price analysis: we look for a higher correction to the upside with a break of the expanding wedge pattern
Market highlights from the past week
Thursday, September 17: the Bank of England held interest rates at 0.1 per cent following the latest monetary policy meeting, with the ceiling of bond purchases under the QE programme also maintained at £745bn ($948bn, 813bn).
Friday, September 18: markets will continue to monitor Brexit trade developments with negative headlines liable to underpin the Swiss franc, while European coronavirus developments will also be a key element.
Monday, September 21: Swiss sight deposits edged lower to CHF703.9bn (£597.5bn, €652.9bn, $761.1bn) in the latest week from CHF704.1bn the previous week, which suggests that the National Bank may have halted currency-market intervention.
Tuesday, September 22: there were some slightly more positive comments from EU sources on Brexit talks, but uncertainty remained extremely high amid logistics reservations.
Wednesday, September 23: UK Chancellor Rishi Sunak will announce economic-support measures on Thursday and an extension of loan guarantees, and it was also announced that there will be no budget statement this year.
GBP/CHF price analysis:
Let’s have a look at the technical viewpoint:
Monthly: traded to a multiyear low of 1.1114 in March. Mixed trading for the past four months has produced inside harami candles, a clear sign of investor indecision.
Weekly: levels close to the 50 per cent pullback of 1.2213 (from 1.3311-1.1114) attracted selling interest.
Daily: A full AB=CD formation is located at 1.1598. A 1.1599 low trade was made on September 11.
Intraday four-hour: posted a symmetrical batter known as a Crab formation. This is:
a 161.8 per cent extension of the 1.2222-1.1858 move seen at 1.1632;
a 361.8 per cent extension from the 1.2222-1.2055 move seen at 1.1618.
An expanding wedge formation is about to break to the upside. The measure move is 1.1889.
Outlook: we look for a higher correction to the upside with a break of the expanding wedge pattern.
Possible trade set-up:
Action: buying at the market (currently 1.1776)
Stop: 1.1720 (below the swing low)
Target: 1.1889 (measured move)
Potential return on risk to first target: R2 (reward 113 / risk 56)
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