GBPCHF making higher lows

GBPCHF making higher lows

By: Darryl Frankfort | Where To Trade | On:27-10-2014 06:31
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Key Highlights

  • Uptrend description
  • Pair making higher lows
  • Technical characteristics of the GBPCHF
  • Suggested trading approach

 

GBPCHF 

From the daily chart we can see that the GBPCHF cross has been consistently making higher highs for the last six months. From peak to trough, the GBPCHF up trend is about 1000 pips. Though for such duration we average about 90 pips net gains per month, the month ranges at about 250 pip waves monthly in quite predictable patterns. From the weekly chart it is easy to see that this cross is moving at a predictable wave pattern of about 600pips up.  The stochastic with a 5, 3, 3 setting is able from this time frame to catch most of the major swings with minimal fake outs.

 

Where To Trade - GBPCHF Predictable waves 27 OCT

 

 

Technical indicators

Monthly Chart

From the monthly time frame, both the 14 period moving average and the 21 period moving average are trading below the candle sticks. This indicates that in the longer term view, the upward momentum ought to continue. We get further confirmation of this view form the fact the two moving averages have just managed to make a bullish cross.

The MACD at this time frame is evidently making higher lows along with the prices, this trend continuation sign also indicates that the uptrend is likely to continue.

The RSI at 53.33 indicates that we are at neutral territory; this is a good sign that the bullish momentum will not be hindered in the long term. The stochastic however is approaching the overbought territory but not quite yet. It is currently reading 78.85. We can thus anticipate the bulls to continue driving up the prices in the coming months.

 

Where To Trade - GBPCHF Monthly 27 OCT

 

Weekly chart

From the weekly chart, the 21 period and 14 period moving averages are touching the prices. They have been trading below the prices and we should take this as a bearish warning that the medium term trend could be reversing.

The MACD from this time frame is making higher lows along with the candle sticks. This is a potential trend continuation signal that indicates that despite the current bearish slide, the prices could continue moving up (the overall trend).

The RSI at 55.81 indicates that we are at neutral territory. We should however notice that since the GBPCHF cross volatility is so low, this indicator at this time frame has not been able to catch any of the major swings of the cross and has been ranging at the neutral territory. We can therefore ignore this reading for now. On the other hand, the stochastic is more sensitive to minute price trends. At a reading of 54.80 it also indicates that we are at neutral territory. We must however note that we just came from the oversold region and thus we ought to wait to get a definite entry signal before taking any side of the market.

 

Where To Trade - GBPCHF Weekly 27 OCT

 

Wrap up

As we have seen, the GBPCHF pair has very unique technical characteristics. The MACD and the Moving averages show that the overall trend from the pair is bullish.

We have seen that we are able to catch great entry signals from the stochastic at the weekly time frame. A great trading approach from this analysis is to wait for a long entry signal from the stochastic in the weekly time frame and catch the next swing upward. 

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