Hi Traders! GBPCHF short term forecast follow-up and update is here. On January 24th I shared this “Technical Analysis – GBPCHF Short And Mid Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, the price which is moving higher has created a bullish trend pattern in the form of three higher highs, and higher lows, we may consider this as evidence of bullish pressure. Generally, after a bullish trend pattern, we may expect corrections and then potential continuation higher. In addition to this, the price reached a key resistance zone that has formed based on the 161.8%(1.13839) Fibonacci expansion level of the first wave and the 61.8%(1.14126) Fibonacci expansion level of the second wave. Also, we have a bearish divergence that has formed between the first high formed at 1.13736 and the second high formed at 1.14293 based on the MACD indicator which we may consider as evidence of bearish pressure. So based on all this, my short expectation is bearish and my mid term expectation is bullish here.
GBPCHF H4(4 Hour) Chart Current Scenario
Based on the above-mentioned analysis, on the H4 chart, my short-term view was bearish here and I was expecting the price to move lower further until the key resistance zone holds. The price action followed my analysis exactly as I expected it to here. The price moved higher, reached the key resistance zone again, respected it and then it bounced lower from this zone. Also, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high formed at 1.14293 and the second high formed at 1.14349 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further after that and delivered 160+ pips move!
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at the majority of the time and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions accordingly.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
