The GBP/CHF pair had another positive session on Wednesday as the rout of the Franc continues. This is a good sign for risk appetite out there, as this pair does tend to follow that overall. This isn’t necessarily a reflection on Great Britain or Switzerland at all times, quite frankly sometimes it’s just simply a reflection on interest-rate differentials. However, we have to realize that the British pound has been very strong against most currencies out there recently, and the fact that it is showing strength against the Swiss franc isn’t exactly a stretch of the imagination.
However, keep in mind that the 1.50 level is just above, so a little bit of a pullback could very well happen. After all, it doesn’t get to be much more of a “big round figure” than the 1.50 level. With that in mind, any pullback at this point time should continue to be a buying opportunity, and it’s believed that the 1.4750 level is a bit of a “floor” in this marketplace as buyers will certainly be cognizant of the area.
British strength continues.
It is very possible that the British pound will continue to show strength, as it is doing well against most currencies. This will be especially true if the British pound can continue going higher, and breaking above the 1.65 level against the US dollar. That should “open the floodgates” as it were, as that would free the British pound to be the strongest currency in the Forex markets. This is of course with major currencies, not exotics.
That being said, the shape of the candle is a fairly impressive, and we are closing in the upper third of the market range for the day. That’s normal a good sign, so we may not even get that pullback if this keeps up. Quite frankly, if we don’t get a pullback and simply get a daily close above the 1.50 level, that should be good enough for traders as well as the market would simply ignore that level and continue the next leg higher.
About the Author
Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo and is a senior instructor at FX Academy www.fxacedemy.com
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