The GBPCHF has bounced around within it current chart formation as visible in this D1 chart. This currency pair ran into strong resistance from its horizontal resistance zone as well as 200 DMA and price action formed an inverted hammer which started a correction which was halted by ascending support levels and the GBPCHF is now trading at the lower band of its horizontal resistance zone. The top of the zone is enforced by its 200 DMA. We expect this currency pair to exhaust its upward trend and reverse, but form a higher low.
MACD has managed to remain in bullish territory, but is currently trapped and getting weaker. We could witness a bearish centerline crossover during the next move lower. RSI is approaching overbought territory, but has weakened as well.
We recommend a short position at 1.4575 which would be an addition to our previous short position which we took on July 31st at 1.4075. We also recommend a stop buy order at 1.4650 with a take profit target of 1.4775.
Traders who wish to exit this trade at a loss are advised to place their stop loss order at 1.4700. We will not use a stop loss order and execute this trade as recommended. Place your take profit target at 1.4250.
Here are the reasons why we call the GBPCHF currency pair lower
- The GBPCHF is currently trading at the lower band of its horizontal resistance zone while the upper band is enforced by its 200 DMA
- MACD has shown momentum is getting weaker and is currently trapped prone for a breakdown into bearish territory
- RSI is approaching overbought territory which we expect won’t be maintainable and expect a breakdown
- Profit taking in order to realize trading profits at strong resistance levels
- New short positions by institutional swing traders