Top Story

GBP/CHF Coiling Below Key Resistance Zone Ahead of BOE on Thursday

With most Asian markets on holiday for the Lunar New Year celebration, Aussie traders on the sideline ahead of tonight’s monetary policy decision, and many US traders out of the office for the informal post-Super-Bowl-Monday-“Holiday,” we’ve seen a predictably slow start to this week’s trade in the FX market.

Beyond a slight lean toward strength in the greenback today, the only other noteworthy development was a short-lived spiked in the pound. Toward the end of today’s European session, sterling spiked by around 50 pips against all of its major rivals, seemingly without explanation. The move has since completely reversed itself, leaving an unsightly long “wick” on the daily candles.

Today’s short-lived excitement aside, GBP/CHF is drawing plenty of eyeballs from a slightly longer-term perspective. The pair surged over 800 pips from trough to peak through January, before spending the last week consolidating at the top of that rally in a comparatively tight range.

This price action has created a textbook “bullish flag” pattern, suggesting that buyers are still in control and foreshadowing a strong rally if we see GBP/CHF break above its resistance zone in the 1.3100 area, where we also saw the pair top out in October and November of last year.

Source: TradingView,

In terms of catalysts for a potential breakout, the most notable data release will be Thursday’s BOE meeting, so readers may want to revisit GBP/CHF if the Bank of England strikes a hawkish tone later this week.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.