The British Pound crosses have reversed following major gains. There may an opportunity to get bullish the GBPNZD on this dip.
There is no reason to change our call for a lower GBPCHF. There is a long term measured support level at 1.9125. The sharp advance from 1.9492 is in 3 waves (corrective) and favors the downside. A triangle could also be forming as wave 4. This is the alternate count. In this case, we would still see a drop below 1.9369, but not before additional range trading.
Looking out longer term, channel support is near 1.84 this month (close to this month’s low at 1.8660). The next major chart support is not until the February 1993 low at 1.7668. We wrote last week that “a corrective bounce is underway near term (it appears); look for resistance at 1.9412.” The ‘bounce’ made it to 1.9562, just shy of the 50% of 2.0568-1.8664 at 1.9593. The rally from 1.8664 to 1.9593 is in 3 waves. We don’t know if this is just the first wave a larger correction such as a triangle or flat but price should come down and retrace a good portion of the rally.
A long term downward sloping channel has contained price since September 2001. We wrote last week the “the rally from the lower end of that channel is in 5 waves (visible on the daily) so expect a corrective decline over the next several weeks and maybe months before the advance resumes.” The rally reached 2.3167, between the 50% and 61.8% of 2.5661-2.0291. Expect weakness near term before strength resumes. Potential support is at 2.2142.
A C wave is working higher from the low earlier this year. This advance will most likely exceed 3.0702 within the next year. 2.5726 may be a wave ii of 2 low. A bullish bias is warranted against there. There is potential support from Fibonacci at 2.6686 and 2.6456.
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT Analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market. Contact at jsaettele@dailyfx.com
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals every weekday morning (9 am EST), COT Analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.
Contact at jsaettele@dailyfx.com