GBP/CHF Price Forecast: May Rally Further As Support Holds
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British Pound vs Swiss Franc Technical Forecast
GBP/CHF- Weaker Bearish Sentiment
On May 18, GBP/CHF declined to an over six-week low at 1.1741 then rallied after as some bears seemed to cover. As a result, the weekly candlestick closed in the green with a nearly 0.5% gain.
Alongside this, the Relative Strength Index (RSI) rose from 34 to 42 highlighting that the bearish move was losing momentum.
GBP/CHF Daily PRice CHART (July 20, 2018 – May 28, 2020) Zoomed Out
GBP/CHF Daily PRice CHART (March 10 – MAy 28, 2020) Zoomed In
Based on the analysis of the daily chart, at the start of last week, GBP/CHF rebounded from the low end of the current trading zone 1.1741 -1.2091 then rallied after. This week, price failed twice to close above the 50-day moving average indicating that bears were still in charge.
A close below the low end of the zone reflects a stronger bearish sentiment and could send the price even lower towards 1.1115. Nonetheless, the weekly support level underlined on the chart (zoomed in) should be considered.
On the other hand, any close above the high end of the zone could trigger a rally towards the 1.2500 handle. A further close above that level may extend this rally towards 1.2915. In that scenario, the weekly resistance levels marked on the chart should be kept in focus.
GBP/CHF Four Hour PRice CHART (April 22 – MAy 28, 2020)
At the start of May, GBP/CHF broke the neckline of the double top pattern residing at 1.2070. Later on, bears took control and led the price to a multi-week low at the low end of the trading zone discussed on the daily chart. On Thursday, the market corrected its downtrend and traded in a sideways move creating a higher low with a lower high.
A break below 1.1654 would be considered a bearish signal and could send GBPCHF towards 1.1439. In turn, a break above 1.2208 may cause a rally towards 1.2382. That said, the technical levels underscored on the chart should be watched closely.
Written By: Mahmoud Alkudsi,Market analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.