GBP/CHF Slides After Hitting Resistance Near 1.2300
|GBP/CHF slid during the European morning Monday, after it hit resistance fractionally above the 1.2300 barrier. Overall, the rate is trading below all three of our moving averages, as well as below the downside resistance line drawn from the peak of May 28th, and thus we would consider the near-term outlook to be negative for now.
At the time of writing, the rate is trading fractionally below the 1.2240 key support obstacle, which is marked by the lows of July 16th and 17th. That hurdle also prevented the rate from falling further back in March, June and August 2017. If the bears are willing to stay in the driver’s seat, then we could see them setting the stage for declines towards the 1.2155 barrier, defined by the low of January 17th, 2017, where another break may extend the slide towards the 1.2100 area, which is marginally below the low of the day before.
Taking a look at our short-term momentum studies, we see that the RSI turned down after it hit resistance near its 50 line, and that the MACD lies below both its zero and trigger lines, pointing down as well. These indicators detect negative speed and suggest that there is ample room for the pair to continue drifting south for a while more.
In order to abandon the bearish case and start examining whether the bulls have gained the upper hand, we would like to see a decisive recovery above 1.2345. Such a move would bring the rate above the aforementioned downside line and would also confirm a forthcoming higher high on the daily chart. GBP/CHF could then climb towards the high of July 12th, at around 1.2415, the break of which may allow extensions towards the peak of July 9th, at 1.2452.
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