GBPCHF—watch for weakness

GBPCHF has been in a range of 1.6118 to 1.7113 since mid-September. I’ve been long recently and am still in (trade wasn’t blogged about) but I’m thinking it may be coming time to close and short the pair. There are signs of weakness.

The last high in mid-December was 1.7026, lower than the top of the range. It has reached 1.7037 today. The pair is struggling a bit, now. Another issue is slight negative divergence on the daily chart. On the three-hour chart, the last candle that closed had a tall upper shadow—since it’s at resistance it makes sense the pair might be rejecting higher prices. The current climb has a steep rate of ascent—the steeper the climb, the less sustainable it tends to be. Even if it continues to rise, there should be some reaction.

The last high in mid-December was 1.7026, lower than the top of the range. It has reached 1.7037 today. The pair is struggling a bit, now. Another issue is slight negative divergence on the daily chart. On the three-hour chart, the last candle that closed had a tall upper shadow—since it’s at resistance it makes sense the pair might be rejecting higher prices. In addition, the current climb has a steep rate of ascent—the steeper the climb, the less sustainable it tends to be. Even if it continues to rise, there should be some reaction.

On the other side of the argument, I have a price target from my point and figure chart that says it could go quite a bit higher. Also, steep or now, the pair is robustly climbing. However, this area, up to 1.7113 is one to watch for possible shorts. Stops will need to be tight as this pair can be tricky.

Here’s the daily chart:


© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.