Technical Bias: Neutral
Key Takeaways
- British pound was trashed Intraday as economic releases in the UK failed to live up to the expectation.
Pairs such as GBPUSD and GBPCHF remain at risk of more downside in the near term.
A strong bearish daily close in GBPCHF and GBPUSD suggests any upside is unlikely.
British pound remains at risk of more declines as any hope of an early interest rate hike got diminished post the inflation report from the BOE.
Technical Analysis
GBPCHF crashed yesterday and traded below an important bullish trend line to ignite a bear rally in the short term. The most important point to note from the charts is that the pair is now trading below all three key simple moving averages (200, 100 and 50) which is a strong bearish sign moving ahead. The recent trend line break might encourage sellers and could take the pair lower towards the 1.50 handle. Currently, the pair is trading around the 50% Fibonacci retracement level of the last leg from the 1.4991 low to 1.5451 high. So, there is a chance of a minor correction towards the broken trend line which might act as a strong resistance for the pair in the short term. Moreover, a critical resistance is around the confluence of 100 and 200 SMA.
On the downside, a break and close below the 50% fib level might call for a move towards the last swing low of 1.4991. There is no doubt that there is a lot of bearish pressure on the pair which could result in a sharp downside move.
Moving Ahead
We need to see how the pair behaves in the coming sessions and correct higher or not. If it corrects higher from the current levels, then it can be considered as a selling opportunity.
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