GBPCHF: Upper Bullish Resistance Line reached Earlier This week remains as barrier
The daily candle chart below shows the price history of the Great British Pound (GBP) versus the Swiss Franc (CHF), known as GBPCHF, and trading near 1.5256 around time of publication today.
Last time this currency pair was covered in the Ideas You Can Trade series in mid-March 2014, support was found on the lower support line of a medium term bullish channel (point 2 in green on chart below), and since then the short term bullish continuation line that was drawn has been followed up to current levels.
Earlier this week the pair encountered resistance on the upper line of the medium term bullish channel, and this level which coincides near the high of 1.5297 still remain a barrier for further upward momentum.
Therefore, traders will be watching to see if a breakout to the upside will happen if 1.53 is breached which would mean that the trend in continuing, whereas a contrarian view point would expect a reversal off the resistance reached two days earlier on May 16 2014.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.5304 with a Limit to take profit @ 1.5331 and a stop-loss @ 1.5281 Risk/Reward Summary: Limit risk = +27 pips profit / (-23) Stop-loss risk = Gain to Loss ratio = 1.17
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.5201 with a Limit to take profit @ 1.5129 and a stop-loss @ 1.5239 Risk/Reward Summary: Limit risk = +72 pips profit / (-38) Stop-loss risk = Gain to Loss Ratio = 1.89
Medium term daily candle chart: