Short-term opportunity to swoop on GBPCHF
Last week saw the cross break out of the weekly Ichimoku Cloud to the downside after the Brexit camp came out on top.
We continue to trade inside a long-term expanding wedge formation which does have the eventual bias to break to the upside, however it is highly unlikely we will see this break any time soon.
Long-term bias remains to the downside with mixed and volatile trading expected to continue with better wedge-base support currently seen at around 1.2690.
Friday saw a retest of the valid wedge-top trendline after early Bremain optimism was overturned, forming a large bearish outside daily candle. This was followed by a gap open yesterday from 1.3239 to 1.3101 and we are currently trading at the levels not seen since January 2015.
Continued selling yesterday saw a second consecutive negative day, but the market failed to break Friday’s low and subsequent overnight buying has been posted.
Looking to the intraday chart, we currently trade in a short-term corrective channel formation. Although our long-term bias remains to the downside, the short-term reaction higher is positive and we view this as an opportunity to set longs whilst this corrective move higher plays out.
Ample reward/ risk today is gained through buying into mild dips. Our bespoke support is currently seen at 1.3000, and with this level acting as previous support, this is where we look to go long.
We look to set a hard stop for this trade below the trend of higher lows which currently comes in at 1.2972.
The channel top coincides with the hourly Ichimoku Cloud base at around the 1.3100 level, so our target for this trade will be placed just below here.
Management and risk description
Entry: buy GBPCHF in front of 1.3000.
Stop: a break below 1.2960.
Target: 1.3095 & 1.3200.
Time horizon: 1-2 days.
Source: Saxo Bank— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more