Published: April 29th, 2021
The UK is in the first position in the vaccine race compared to Switzerland and other European countries. Based on the vaccine implementation, the UK has a higher possibility to show a rebound in the economy. However, based on the recent price action of GBPUSD, the Pound is struggling against the US Dollar while CHF is dominating strongly. Therefore, the strong CHF may affect SNB’s 2% inflation target as the strong CHF will influence cheaper imports.
Despite the positive vaccine implementation, GBP is struggling to gain against the CHF as the price moved below the 1.2732 level. Can Bears push the price lower? Let’s find the upcoming price direction from the GBPCHF Stock technical analysis!
GBPCHF started to move lower as soon as it reached the 1.30 level following a regular divergence in MACD. Later on, the price moved below the 1.2732 event level with a daily close and tried to move above it but failed. As a result, it’s been a week since the price is trading below this level, with multiple wick rejection at the upside, on the daily chart.
In the above image, we can see the daily chart of GBPCHF, where the price became very corrective as soon as it came below the 1.2732 level. Moreover, the dynamic 20 EMA is carrying the price, which indicates that there are active sellers in the market. Therefore, as long as the price is trading below the dynamic 20 EMA on the daily chart, it has a higher possibility to move lower, where the primary target would be 1.2450, 100 SMA level.
Moreover, MACD is still bearish, and any new low in the Histogram may increase the selling possibility. Conversely, a strong bullish daily close above the 1.2750 may indicate buyers’ dominance in the price. In that case, the price may move towards the 1.2950 resistance level.
Like the Daily chart, H4 is still bearish as the price is trading below the Kumo Cloud and Senkou Span A is below the Senkou Span B in the future Cloud.
In the H4 timeframe, the price showed a bullish rejection from the dynamic 20 EMA. Moreover, Tenkan Sen and Kijun Sen are above the price and pushing more resistance. Chikou Span is also below the price and heading downwards.
Based on this market condition, the price may face minor support from the static 1.2640 level, but a strong bearish H4 close below the recent low of 1.2660 may initiate an impulsive bearish trend.
On the other hand, the thickness in the Kumo Cloud is not strong. Therefore, a strong rebound above the Kumo Cloud may alter the current bearish picture. In that case, investors should wait for a daily close for further decisions.
In the intraday H1 chart, GBPCHF is very corrective as the price is violating dynamic levels multiple times. However, the session volume levels make new lows, indicating that sellers are still interested in adding positions even if the price is low.
In the above image, we can see that the current high volume area is at 1.2684 level, and the price is corrective. Therefore, bears need to see the price below the 1.2684 level with an H1 close to ensure the bearish potentiality.
However, ADX is below the 20 levels and pointing downside. In this situation, investors should find the ADX above the 20 levels with a strong bearish H1 close may indicate another way to join the bearish trend. However, the bearish price is active as long as it is trading below the 1.2732 level. Any bullish H1 close above this level may make the bearish setup invalid.
As of the above discussion, we can say that the GBPCHF has a higher possibility to continue the bearish pressure as long as it is trading below the 1.2732 event level. In that case, the primary target would be 1.2450 level.
Conversely, the UK is ahead of Switzerland in recovering from the COVID-19 infection and vaccination program. Moreover, SNB may struggle to achieve the 2% inflation target due to the strong CHF. In that case, investors should closely monitor the SNB rate statement where any dovish tone would create immediate bullish pressure on the GBPCHF price.