After a strong downside move, the pair might need some rest, and 24 hours of consolidation can be expected. During this time the selling opportunity might remain open.
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:
GBP/CHF symbol
Type: Bearish
Key support levels: 1.2035, 1.1983, 1.1862
Key resistance levels: 1.2088, 1.2124, 1.2123
Price Action:
Today there was a very bearish price action produced by GBP/CHF on the hourly timeframe. After the clean rejection of the 50 Exponential Moving Average, GBP/CHF went sharply down. Price broke below the massive support zone at 1.2125, where previously it has acted as the resistance. At the same time, it broke below the point where price previously rejected the EMA, suggesting strong bearish domination.
After a strong downside move, the price might consolidate for a short while and potentially go towards one of the resistance levels. Specifically, 1.2088, 1.2124, or 1.2123, which are confirmed by the Fibonacci retracement level and previous level of support. The Fibonacci was applied to the overall uptrend and not only shows levels of resistance but also the support. The downside target could be at 88.6% Fibs which is 1.1863 level.
The 1.1863 support is also confirmed on the daily chart, which clearly corresponds to another 88.6% Fibonacci retracement. But this time, the Fibonacci indicator was applied to the 12.08.2019 – 13.12.2019 corrective wave up.
Potential Trade Idea: The entry point near 1.2090 seems quite good because it also corresponds to the 38.2% Fibonacci resistance and gives a 1:2 risk to reward ratio. Although there could be a better opportunity, where price might correct either towards 1.2124 or 1.2153 resistance levels. Stop-loss could be placed near 1.2185.
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