The GBPCHF has been stuck in a trading range over the past few days as visible in this H4 chart. This currency pair has formed a falling wedge formation and currently trades around ascending support levels as it tries to form a bottom. We believe this pair will move higher and back into its descending resistance level which is enforced by its declining 50 DMA. A breakout of the formation will open the way to new highs.
MACD has formed a positive divergence which bodes positively for a future breakout for this currency pair. RSI has formed a positive divergence as well and has been trading in and out of oversold territory, which is a very bullish sign.
We recommend a long position at 1.4200 which will be an addition to our two existing long positions we took on January 22nd as well as January 25th at 1.4755 and 1.4640 respectively as well as our hedge on February 25th at 1.4135.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 1.4135. We will execute this trade as recommended as we seek to reduce our overall exposure to this currency pair over the next six to eight weeks. Place your take profit level at 1.4450.
Here are the reasons why we call this currency pair higher
- GBPCHF has formed a falling wedge formation
- Most recent price action tries to form a bottom
- MACD has formed a positive divergence
- RSI has formed a positive divergence
- RSI trades in and out of oversold territory which is a very bullish sign
- Short covering rally
- Better economic news out of the UK
