GBP/CHF tumbled yesterday, falling below 1.2625, which acted as the lower end of the sideways range that had been containing most of the price action since April 7th. The rate broke that barrier again in the past, and most recently on July 8th, but the bulls were quick to take charge and take the action back within the range. Now, it seems that they are not willing to do so as, today, they allowed the rate to move below yesterday’s low of 1.2530. All this paints a negative short-term picture in our view.
We believe that the dip below 1.2530 may have opened the path towards the psychological number of 1.2500, which supported the price action back on February 19th, where another break could target the inside swing high of February 17th, at 1.2465. If that barrier is not able to halt the slide either, then its break may carry larger bearish implications, perhaps paving the way towards the low of that day, at 1.2385.
Shifting attention to our short-term oscillators, we see that the RSI turned down again, and it is now testing its 30 line, while the MACD lies below both its zero and trigger lines. Both indicators detect strong downside speed and increase the chances for GBP/CHF to continue drifting south, at least for a while more.
In order to abandon the bearish case, we would like to see a recovery back above the 12660 barrier, a move that may confirm the pair’s return within the range. This will change the outlook back to neutral, but we cannot rule out further advances within the range. We may see the bulls initially targeting the 1.2745 or 1.2760 barriers, marked by the highs of July 16th and 14th respectively, the break of which could put the 1.2800 under the limelight, which is the upper bound of the range.
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