GBP/CHF traded higher on Wednesday after it hit support at 1.2310. However, the advance stayed limited below yesterday’s beak of 1.2350. In the bigger picture, after hitting resistance near 1.2370 on December 23rd, the pair entered a small consolidation phase but remained above the upper end of a recent sideways range. Therefore, we see chances for the bulls to wake up again soon.
We could see them overcoming yesterday’s high at 1.2350 and targeting the peak of December 23rd, at 1.2370, but the break above that hurdle is the move that could unlock a stronger bullish force. Such a break could pave the way towards the 1.2425 zones, which provided support back on November 19th and 25th, the break of which could extend the advance towards the high of November 25th, at 1.2475.
Shifting attention to our short-term oscillators, we see that the RSI rebounded after hitting support at its 50 lines, while the MACD, although slightly below its trigger line, is positive and looks able to turn up again. Both indicators detect upside speed and support the notion for further advances in this exchange rate.
On the downside, a break back below 1.2290 is likely to signal the rate’s return back within the sideways range that was in place from November 30th until December 23rd. We will consider the outlook to have changed back to neutral, with the likelihood of experiencing further declines within the range. The first stop could be the low of December 22nd, at 1.2238, or an intraday swing low of the day before, at 1.2217. If neither territory is able to stop the slide, then we could see extensions towards the 1.2175 zone.
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