British Pound, GBP/CAD, GBP/NZD, GBP/CHF - Technical Forecast
- British Pound downtrend appears to be showing signs of hesitation
- GBP/CAD bounced on support, was that a false downside breakout?
- GBP/NZD eyeing rising trend line, GBP/CHF faces the 2011 bottom
British Pound Technical Outlook
After the worst week for GBP/USD since 2008, early technical signals are showing signs to treat further downside progress with caution. On the daily chart below is my majors-based GBP index which has formed a Long-legged Doji candlestick on Monday. This is a sign of indecision which with upside confirmation may precede a turn higher. Earlier this month, the same formation preceded the drop into last week’s dismal Sterling performance. With that in mind, keep a close eye on the 61.8% Fibonacci retracement below.
Note that the coronavirus outbreak is resulting in higher-than-normal levels of market volatility.
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Majors-Based British Pound Index – Daily Chart
GBP/CAD Technical Outlook
GBP/CAD bounced off the support range between 1.6920 to 1.6981 after appearing to falsely break under “inner support” on the daily chart below. An upside close could pave the way to retest 1.7270 on the way towards the 23.6% Fibonacci retracement at 1.7539. Resuming the top entails taking out 1.6920 which would expose “outer support” that may maintain the medium-term uptrend.
GBP/CAD Daily Chart
GBP/NZD Technical Outlook
Last week, GBP/NZD temporarily spiked up towards key long-term falling resistance from 2001. In the more immediate sense, this meant that horizontal resistance (2.0474 – 2.0673) held. The latter consists of peaks from 2018, 2019 and thus far in 2020. That has sent GBP/NZD aiming towards rising support from July – blue line on the weekly chart below. A close under may shift the technical bias to the downside. Negative RSI divergence is showing that upside momentum is fading which may precede a further selloff to come.
GBP/NZD - Weekly
GBP/CHF Technical Outlook
GBP/CHF remains in an aggressive downtrend since prices closed under rising support from 2019 – red line below. Now prices are testing the key support range between 1.1468 to 1.1676. This area contains the 2015 low after the Swiss National Bank (SNB) unexpectedly dropped the floor in EUR/CHF, resulting in sudden and aggressive Franc appreciation as the exchange rate capitulated.
Maintaining the downtrend is “inner resistance” which if taken out, exposes “outer resistance” dating back to the end of last year. The latter may maintain the downtrend down the road. From here, taking out support at the 2011 low would expose the 100% Fibonacci extension at 1.1209. Closing under the latter opens the door to the 123.6% level at 1.0943.
GBP/CHF- Daily Chart
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
