Chart of the Day - GBPCHF
Bearish GBPCHF:
GBP: Brexit remains on the forefront, following a series of votes on Tuesday that were critical in the Brexit proceedings. GBP had swung wildly on Tuesday, initially ticking modestly higher after the first of two votes, where UK PM Boris Johnson received parliamentary majority – passing 329 to 299 – to move his Withdrawal Agreement Bill legislation to the next stage. However, price action was capped ahead of the second and more-important vote, a fast-tracked Brexit timetable, which set out a 3-day schedule to rush his deal through the House of Commons. This second vote, referred to as the program motion, did not pass, however, with the result being 308 to 322. Consequently, GBP tumbled to lows. In response to the failed vote, Boris Johnson said the next steps are “to intensify preparations for a no-deal Brexit” and “pause legislation until the EU has made up its mind about a delay”. Meanwhile, there were reports of the European Commission saying that President Donald Tusk is consulting EU leaders on extending the Brexit deadline to 31 January 2020, after the UK government lost the fast-track vote in Tuesday’s parliamentary session.
CHF: The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately may not prove to be as effective as it once was, given where we're at in the monetary policy cycle
From a technical and trading perspective the GBPCHF has tested a resistance cluster 1.2850/1.29 containing symmetry,equidistance swing and fib significance. Yesterday’s bearish key reversal coincided with an exhaustion volume spike on the prior test of resistance, the tails on the daily candles combined with daily divergence suggest near term exhaustion. A breach of 1.27 today would confirm the reversal pattern and open a move to test prior resistance as support at 1.2490, a breach of 1.2785 would negate the pattern and give cause to reassess.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!