The GBPCHF has rallied over the past few weeks as visible in this H4 chart. This currency pair has formed a rising wedge formation after it completed a breakout above its 200 DMA. We believe this currency pair will now retest its new support level and correct back down to its ascending support slightly above its 200 DMA before we may see more upside potential.
MACD has shown severe bullishness in this pair after its bullish centerline crossover which suggest higher highs are possible after a much needed correction. RSI trades in extreme overbought territory, but started to move lower. A breakdown into overbought territory should ignite a larger sell-off which should be halted at support.
We recommend a short position at 1.4585 which would be an addition to an existing short position we took at 1.4135. We did close our three open long positions today at 1.4560.
Traders who wish to close this trade at a loss are advised to place their stop loss level at 1.4700. We will not use a stop loss order and execute this trade as recommended. Place your take profit level at 1.4285.
Here are the reasons we call the GBPCHF currency pair lower
- GBPCHF formed a rising wedge formation
- Current price action is located at ascending resistance levels
- Correction is required in order to maintain bullish momentum
- RSI trades in extreme overbought territory with early signs of weakness
- Profit taking
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