- The British Pound has formed a rather intriguing candlestick for the session on Monday against the Swiss Franc, as we initially gapped lower only to turn around and rally fairly significantly.
- While not quite an engulfing candlestick, it certainly has that same feel to it.
- I think this is a pair that's very obviously at the top of a range that we had been in for quite some time between the 1.11 level on the bottom and the 1.14 level on the top.
At this point, I think if we can break above the 1.14 level, the British pound could really start to take off against the Swiss franc, perhaps even opening up the possibility of a move to the 1.1650 level. Keep in mind, this pair is highly sensitive to risk appetite, as the Swiss franc of course is considered to be a safety currency. It's probably also worth noting that the British pound has been rallying against the US dollar, which of course is the measuring stick for strength or weakness for most currencies. So, when I see this setup here, it does make a certain amount of sense that we could eventually break out.
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Potential Move
If you take the so called measured move, it actually suggests that we could go as high as 1.17, but I do see some resistance there on longer term charts. If things turn around and start following the overall consolidation pattern here, then somewhere around 1.13, I think you'll see more of a push to get short of this market. At that point, you could drop down to the 1.12 level, followed by the 1.11 level, which I think is pretty rock solid as a floor in the market at the moment. To break down below there, I think you would have to have some type of major shock to the financial system to have people running to the Swiss franc, especially with the massive interest rate differential between these two countries.
GBP/CHF Live Chart
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