Yesterday we noted GBPCHF was rebuffed by channel resistance and the daily Ichimoku Cloud top around 1.4570/75, however we felt the outlook still remained bullish since daily RSI broke above corresponding channel resistance prior to price. Sure enough, towards the beginning of the European session GBPCHF broke above the aforementioned 1.4575 resistance level, as Switzerland’s October CPI disappointed (-0.1% MoM vs. +0.1% exp.) and UK’s October PMI Services increased unexpectedly to 62.5 from 60.3 in Sept. (consensus 60.0). Furthermore, this bullish momentum saw GBPCHF break above its previous high around 1.4640 later in the session, thus ending the downtrend which began in mid-September.
As a result, today’s move validates the channel breakout and projects a measure move objective of 1.4815. Interestingly, this target coincides with the prior 2013 highs from May & September between 1.4810/20 – It may also be prudent to keep an eye on daily RSI’s key 60/65 level, as a break higher could signify a renewed uptrend in price. That said, should the remaining economic data/events this week surprise the market and a continuation higher not materialize, a break back below 1.4500 would be needed to negate GBPCHF’s overall bullish bias.
Chart Source: Forex Charts by eSignal
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