28.02.202012:00 Forex Analysis & Reviews: Analysis and recommendations for GBP/CHF on February 28, 2020

Hello, colleagues!

Since today is Friday and there will be a so-called triple closing (month, week, day), I suggest that you leave the main currency pairs alone and return to them on Monday.

First, there is a category of traders who actively trade cross rates. Second, the pause from Thursday to Monday creates a "fresh look" at the currency pairs. Third, there are quite interesting and technical crosses that form clear signals for opening positions.

The disadvantages are low liquidity and a large spread.

So, today we will consider a rather interesting cross-rate of the pound/franc. The poor pound is already suffering from the fact that the UK and the European Union are not yet able to conclude a full-fledged trade agreement and are at the stage of a transition period. And then there's the spread of the coronavirus in almost all continents, which provides support for the franc. In general, the pound is under selling pressure. I will not show the monthly chart now, but we will see the weekly chart.

Weekly

Today, the current week's trading ends and this trend is absolutely bearish. We see a huge black candle that has confidently entered the limits of the Ichimoku indicator cloud, and the trades are held approximately in the middle of the cloud. If the GBP/CHF bears hold power over the pair and close trading within the cloud, next week we can expect a continuation of the downward movement. The nearest goal of which will be the lower border of the same cloud. A true exit down from the cloud will open the way to a strong technical zone near 1.2100.

Now about the priorities of players for promotion. In order to correct the current situation, it is necessary to raise the quote above 1.2547 and close trades above this mark. This is where the upper border of the cloud passes, from which the bulls need to withdraw the pair. At the moment, this task looks very difficult, and its implementation is unlikely. However, let's look at the lower timeframes, perhaps there are signals for a corrective recovery.

Daily

As they say, bears rule. At the moment of writing on the daily chart, there are no signals for a corrective recovery. After the breakdown of the key support level of 1.2525 and the departure of the cross below the psychological level of 1.2500, the further prospects of the downward dynamics look very strong and most likely.

Naturally, there will be corrective pullbacks or rebounds. The market can't just fall or grow all the time - it's a matter of time. I believe that the task of those who want to trade GBP/CHF will be to use the expected corrective upward movement to open short positions on this instrument.

On the daily chart, the pound/franc is trading near another strong technical level of 1.2400. If today's trading ends above this level, I do not exclude the correction of the cross to the area of 1.2500-1.2525. Yes, this is about 100 points, however, GBP/CHF is volatile and it overcame such distances in an exceptionally short period. I remember when I switched to this pair in 2012 - at first, I was shocked by the volatility and scope of daily movements.

H1

For greater clarity, I decided to show the hourly chart immediately by jumping over H4. Let's see what happens. There is a bullish divergence of the MACD indicator, which indicates that the pound is oversold and is an additional signal for a possible correction. I stretched the grid of the Fibonacci tool for the fall of 1.2704-1.2396 to indicate the Fibo levels from which it is worth selling if the cross reaches them. It seems that I stretched the net for nothing because the pressure increases at the beginning of the current hour. However, the pound/franc is trying to rebound from 1.2395 and the struggle of the opposing sides for the mark of 1.2400 continues.

I will indicate the most technically sound options for sales, which is better to open only after correction. So, I suggest looking at sales on the rise to 1.2450, 1.2470, 1.2500 and 1.2525. It doesn't make sense to talk about higher goals yet, the pressure on the cross is very high!