Trade Recommendation: GBP/CHF

The British Pound/Swiss Franc (GBP/CHF) pair became bearish in September 2014 when it created a double top structure at 1.55 on the weekly chart. Sensing that the bull run had come to an end, British Pound holders dumped the currency. As a result, the pair nosedived to 1.27092 in January 2015. In less than four months, GBP lost 18.01% of its value against CHF.

Even though the pair managed to rally, it could only go as high as 1.55707 in November 2015. Bulls tried to take out the resistance level, but they failed. Bears strengthened their hold on the resistance and sent the market plunging to as low as 1.18981 in October 2016. The market then used the bottom to create a base and spark a significant rally. Recently, it has created a higher low that can ignite an uptrend.

Technical analysis reveal that the British Pound/Swiss Franc pair is poised to take out 1.35 resistance, and trigger a bullish cup and handle reversal pattern on the weekly chart. With a higher low at 1.28615, bulls are in a very good position to mount an advance and breach the resistance. Furthermore, the pair is not yet in overbought territory, which means it has room to complete the breakout before it corrects.

The strategy is to buy the breakout at 1.35. If bulls cement 1.35 as a new support level, they will use it to create a base and climb to 1.55. The process may take more than six months.

Weekly Chart of GBP/CHF on Forex.com

As of this writing, the British Pound/Swiss Franc pair is trading at 1.34352 on Forex.com.

Summary of Strategy

Buy: Breakout at 1.35.

Target: 1.55

Stop: 1.335

 

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.