Wednesday, July 20, 2016

Gbpchf: Further Rally To 1.35 Is Likely

After the BREXIT bearish reaction across all Gbp pairs, there have been some recovery but really shallow. The BOE maintained 0.5% rate against all odds and expectations.

The correction across all Gbp pairs are very similar showing the dominance of this currency against others.
There is a very reasonable probability that the correction upside will continue.

The chart below shows the hourly price action of Gbpchf.



Price is presently in a corrective move upside i.e subwave (ii) of (III) of [V] . Second waves are characteristically deep, most times get to 61.6% Fibo retracement or even deeper but are exclussively rejected below the starting point of the first wave (according to the Elliott wave theory).

The pattern we are having here could be an expending flat (a flat pattern where the C-wave breaks above the starting point of the A-wave). The C-wave is expected to be a motive wave, in this case, an impulse wave. Price is presently at an intra-day support which that could be the end point of wave (iv) of C and the starting point of wave (v) if price breaks the wave (iii)-(iv) channel line.

The chart below gives another clue that support the same view.


  

The chart above shows that a classic reversal chart pattern (the head and shoulder) could be on the way if price moves as speculated above. The move could break above 1.322 neck line and reach 1.35 price resistance level.



The chart is a 15min chart and shows the minimum requirement to consider a short term  bullish opportunity to 1.35. If price is supported above 1.284 and breaks above the channel, a move to 1.32 and 1.35 is very likely.

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