GBP/CHF Cleanly Rejecting the Resistance Suggesting an Upcoming Strong Move

GBP/CHF Cleanly Rejecting the Resistance Suggesting an Upcoming Strong Move

Published: October 27th, 2020

Weekly chart

GBP/CHF Weekly Technical Analysis 27 Oct 2020

Staring with the weekly chart, clearly, the trend is bearish as the price continues to print lower lows and lower highs. Back in December 2019 GBP/CHF rejected the 200 Exponential Moving Average, along with the uptrend trendline which previously got broken. On September 1, GBP/CHF rejected the 50 EMA, showing that bears remain in control.

Throughout the past month, the pair has been rejecting the 23.6% Fibonacci retracement level, which currently is still acting as the resistance. This shows that sellers are defending the 1.1900 psychological level, and downside pressure is likely to increase this or next week. The nearest support is located at 50% Fibs which is 1.1628. Although if it will get broken with a daily and weekly close below, the price is likely to move lower towards one of the next Fibonacci support levels.

Daily chart

GBP/CHF Daily Technical Analysis 27 Oct 2020

On this chart, the Fibonacci retracement indicator was applied through the lowest low and the point of rejection of the 50 EMA, and another Fibs was applied to the last wave down. There are two important levels, first is the 50% Fibs at 1.1966, which has been rejected cleanly as can be seen on the chart. Along with the Fibs, price rejected the average-price downtrend trendline and the 50 EMA. Seems like the key supply area is near the 1.1966, and as long as it is being respected downside move will be highly probable.

The second Fibonacci level, which is 50% at 1.1628, shows the potential support and the downside target. Previously it already acted as the demand area, which might be the case once again.

16-Hour chart

GBP/CHF 16-Hour Technical Analysis 27 Oct 2020

The key support and resistance areas are clearly visible on this chart. The nearest resistance is at 1.1966, which corresponds to the 50% Fibs and the uptrend trendline along with the 50 EMA breakout point. If there will be a daily break and close above, the price is likely to move up and test the next resistance area near 1.2143. But as long as 1.1966 holds, the price should be expected to move towards the key support near 1.1628.

Right now, GBP/CHF is rejecting the 50 EMA, and perhaps this could be the beginning of another downside move. Obviously, buyers could be waiting for the daily close, to make sure that GBP/CHF will stay below the EMA.

4-Hour chart

GBP/CHF 4-Hour Technical Analysis 27 Oct 2020

In this timeframe, the price has been forming a triangle pattern between September 28 and October 20. At the end of October price went down and broke below the key support level at 1.1772, confirming a potential downtrend. Then price corrected up fast and sharp, hitting and rejecting the downtrend trendline of the triangle. The most recent price action shows that the pair rejected the uptrend trendline, which previously was broken and currently acting as the resistance. And maybe once again, for sellers, this could be the signal to act. The downside target on this chart is now confirmed by two Fibs, 50%, and 661.8% Fibs applied to the corrective wave up after price broke the uptrend trendline back in September.

1-Hour chart

GBP/CHF 1-Hour Technical Analysis 27 Oct 2020

On the hourly chart, the support area has been formed near 1.1900 psychological resistance. After the last bounce price went down hitting 1.1774 support and corrected up. The upside correction was stopped by 61.8% Fibs at 1.1857, which GBP/CHF rejected cleanly. The final confirmation of the downtrend could be a break below the support uptrend trendline after which the price can move towards the 1.1628 support. This support is confirmed by 2 Fibs as well as the average-price downtrend trendline, suggesting that GBP/CHF could test this level on November 4.

Summary

Today GBP/CHF cleanly rejected 61.8% Fibs as per the hourly chart. This could have been the highest high this week and as long as 1.1857 resistance holds, downtrend expectation will remain valid. All-in-all, the price could drop by 200 pips during the next 7 trading days.

Downside targets

As per the 4-hour and 1-hour chart, the key support is located at 1.1628 and is confirmed by 2 Fibonacci retracement levels. Based on the Fibonacci cycles, it could be reached during just one trading week.

Probability of an uptrend

As per the 16-hour chart, daily break and close above 1.1966 will invalidate bearish outlook, in which case GBP/CHF is likely to re-test the next resistance at 1.2143.

Support: 1.1772, 1.1628, 1.1507, 1.1334

Resistance: 1.1857, 1.1900, 1.1966, 1.2143

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