The bias is bearish as long as there is no daily close above 1.2020. This is a short term trade setup for the target of 130 pips, which could last approximately 24-48 hours. At the same time, 200 SMA must be watched for the breakout in order to confirm the exit signal.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
Key support levels: 1.1868, 1.1732, 1.1512
Key resistance levels:1.2020
Price Action: on the 4-hour chart we can clearly see the double bounce off the 200 Simple Moving Average. At the same time price started to print lower lows and lower highs. This might result in further price decline while the major downtrend is likely to continue.
The 30-minute chart below shows that RSI formed a bearish divergence and price broke below the 200 EMA and 200 SMA. Also, GBP/CHF broke below the ascending channel and on the recent corrective move up rejected the 61.8% Fibonacci retracement cleanly. This could be the starting point of the price drop. The key and the nearest support is based at 23.6% Fibonacci retracement level at 1.1868. If this level is broken, pair can go further down to test 38.2% Fibs at 1.1730 or go even lower, towards the 61.8% Fibs at 1.1511.
The key resistance currently is 1.2020. Spikes above this price are possible, but only a clean daily break and close above will invalidate the bearish scenario and can result in an uptrend.
Potential Trade Idea: there is a selling opportunity presented while the price remains near 1.2000 key psychological resistance level or within the 1.1970 – 1.2020 area. The downside target could be near to 23.6% Fibs, which could be around 1.1868.