- The British pound has rallied a bit against the Swiss Franc during the trading session here on Thursday but is giving back some of the gains as we run into a little bit of noise near the 1.0950 level.
- If we can break above there, then we could go to the 1.10 level.
- And that really wouldn’t surprise me, but it does look like we are a little bit overextended at the moment, and I would anticipate a little bit of a pullback. That’s fine. That’s typical.
We’ve had a huge shot higher, and it makes a lot of sense to think that perhaps we are going to maybe pull back a bit towards the 50-day EMA before bouncing again. That of course is assuming that the risk appetite remains strong. If it does, then generally speaking the British pound is going to end up being much more interesting than the Swiss franc itself, which of course is very sensitive to when people are running for safety.
They Run to Switzerland when Fearful
After all, Switzerland is long considered to be one of the major safe havens. And of course, Britain, although not necessarily exactly risky, is considered riskier. A pullback I think makes a lot of sense. But a bounce from there does as well. If we were to somehow just shoot straight up in the air and break above the 1.10 level, then we’re going to challenge the 200-day EMA.
I have no interest in shorting this pair. I do think that we are in the midst of finding a bottom, but a lot of times that ends up being a bit of a messy process on the way back up. That wouldn’t be very surprising at all. I’m still bullish. I just recognize that a short-term pullback is very possible at this point.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.