Today we have an interesting opportunity for GBPCHF as I think the pair can form a short term top soon as we are approaching some critical resistances on the daily chart as shown below. We also have an opening week gap, which I think can be closed sooner or later.
Looking at the 4 hour chart of GBPCHF, RSI is heading into the extreme territory around 80 and Stochastic is also showing signs of exhaustion. There are some key resistances at around 1.4700, 1.4720 and 1.4800, and I think GBPCHF can make a stop at any of these levels. In order to enter a sell trade, we need GBPCHF to make a stop at any of these resistances, and form a bearish candle pattern along with bearish divergence on the 1 hour chart. Initial target should be the opposite band of the Bollinger and final target could be the opening gap close. Stop should be placed above the next resistance after entering into the trade. I would suggest to trail the stop once initial target is reached or take 50-60% of profit, and let the other part run for the final target.
Reviewing yesterday’s events and trades
Fed’s Beige book was released yesterday, which highlighted that 8 out of 12 districts reported moderate growth, and Fed lending activity weakened a bit. BOC (Bank of Canada) kept the interest rate unchanged at 1.0%, which boosted the Canadian dollar. NZDUSD and AUDUSD were the biggest gainer of the day and traded as high as 0.7925 and 0.9185 respectively. Our trade forecast for EURUSD and USDCAD worked as expected.
Fundamental Outlook for the day
Today is an important day as Bank of England (BOE) and European Central Bank (ECB) interest rate decisions is scheduled later in the day. BOE is expected to keep the interest rates at 0.5% with no change in asset purchases. ECB is also likely to keep the interest rates unchanged at 0.5%, but focus would be on ECB President Draghi’s speech. Investors would be watching his speech closely in order to know more about the forward guidance from ECB, which can cause volatility in the market. Other than this, US ADP Nonfarm Employment change numbers and US Initial Jobless claims data are also lined up later in the NY session.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURGBP, AUDCAD, EURAUD, SILVER, GOLD and USDCAD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
