GBPCHF Pressing Channel Top Ahead of Scotland Referendum and SNB

FX traders are about to enter an action-packed next 72 hours, with BOE Minutes, monetary policy decisions from the Fed and SNB, the ECB’s TLTRO auction, and of course, the result of Scotland’s highly-anticipated independence referendum all scheduled for release by the end of the week. While all markets will be impacted by the upcoming Fed and ECB announcements, GBPCHF could be particularly volatile due to the SNB decision and Scottish Referendum. We’ve already covered the fundamental factors driving for these two decisions (see the links above for more), but we wanted to reset the key technical levels to watch moving forward on GBPCHF.

After rallying nearly 1,000 pips from March to July, GBPCHF has lost a bit of its luster over the last two months. The pair has formed a near-term bearish channel over that period, and is now consolidating between its 50- and 200-day moving averages (see chart below).

At this point, the most important support level to watch is 1.4950, which represents the confluence of the 50% Fibonacci retracement, 200-day MA and bottom of the bearish channel. Meanwhile, resistance looms at last week’s high and the 50-day MA near 1.5230. As we go to press, the secondary indicators are showing balanced, two-way trade: the MACD is inching back to the neutral “0” level, while the RSI indicator is almost exactly at 50. That said, the RSI is pressing against a bullish channel that, if broken, could foreshadow a bullish breakout in price as well.

Tomorrow’s UK jobs data and the BOE minutes could serve as an appetizer for traders craving volatility, but it would be prudent to wait until after the SNB and Scottish independence referendum before committing too strongly in either direction. When the dust settles, a close above 1.5250 this week would open the door for a continuation toward 1.5430 later this month, whereas a break below 1.4950 support could expose 1.4830 (61.8% Fib support) or 1.4670 (78.6%) next.

Source: FOREX.com