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Forex: Ideas You Can Trade- GBPCHF Nearing Triangle Formation

Posted by Steven Hatzakis on Oct 8, 2013 1:13:00 PM

GBPCHF:  Support found after short term pullback in medium term uptrend, symmetrical Triangle forming

The daily candle chart below shows the price history of the Great British Pound (GBP) versus the Swiss Franc (CHF) over the medium term. This pair is known by the GBPCHF symbol and is currently trading near 1.4533 (as of publication).

The pair had been following under the upper resistance line of a short term bearish channel (point 3 in magenta on chart) after reversing near a medium term static resistance level near 1.4811 in early September following a breakout above a long term downtrend in late August when we last covered the pair in a previous article.

The GBPCHF paid has recently found support upon a short term bullish line (point 5 in aqua) in 3 of the last 4 trading sessions and is approaching the point of what appears to be a nearly formed asymmetrical triangle formation (intersecting trajectories of point 3 and point 5).

Accordingly, support may hold over the next few session (on point 5) with a decisive breakout following to either side of the triangle formation in coming days. Such a breakout could be fueled from the growing consternation surrounding the US government shutdown and its affect on financial market prices, even for non-usd crosses such as the GBPCHF (since any corresponding move in the GBPUSD and USDCHF would indirectly affect the GBPCHF).

If the support line (point 5) fails to hold, the pair may trade near 1.43 over the short term via the existing support line of the bearish channel (point 3) by mid October.


 Below are examples of how to trade a bearish continuation or a bullish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.4610 with a Limit to take profit @ 1.4690 and a stop-loss @ 1.4578  Risk/Reward Summary: Limit risk = +80 pips profit / (-32) Stop-loss risk = Gain to Loss ratio =   2.50

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.4497 with a Limit to take profit @ 1.4436 and a stop-loss @ 1.4555 Risk/Reward Summary:   Limit risk = +61 pips profit / (-58) Stop-loss risk = Gain to Loss Ratio =  1.05

Medium term daily candle chart:

gbpchfdaily oct 8 2013 note

 

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