- The British pound has initially tried to rally during the session on Tuesday, as the market obviously would favor the higher interest rate in the United Kingdom, as you get paid swap at the end of the session in this market.
- The pair GBP/CHF tends to be quite volatile, and therefore you need to be careful with your position size, but at this point, it is likely to see more back and forth than anything else.
- The market has been in a range for some time, going back well over a year. The 1.14 level has been a ceiling for this pair, while 1.11 has been like a floor for this pair.
- This is a market that has been somewhat reliable, as far as this range is concerned. The pair continues to move back and forth, and I think this is what is to be expected at this point in time.
The technical analysis for this market is likely to continue to look sideways longer term, but at this point in time, the market is also watching the two major moving averages, including the 50 Day EMA, and the 200 Day EMA. These are sideways, and I think this will continue to be an influence on where we go next. Can they hold as short term support? We will see, but it is interesting to watch, as it could give us an idea as to where risk appetite is going.
If we can break above the 1.14 level, this could send the market racing higher. At this point, I am looking for this pair to go looking to the 1.16 level above. On the other hand, if the market dropped below the 1.11 level, then we could see the GBP drop down to the 1.09 level. Both of these potential moves are based on “measured moves” in markets due to the size of the consolidation area.
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