Trade Idea – GBPCHF Sell Setup Based On Bearish Hidden Divergence

GBPCHF Short Term Forecast And Technical Analysis

Hi traders, today we are going to talk about a GBPCHF sell setup. Multi-time frame analysis will be applied in order to identify the momentum and trend on the higher time frames as opposed to our trading time frame.

GBPCHF W1 (Weekly) Chart – Hidden Bearish Divergence, Key Resistance Level

On the weekly chart the price has reached a key resistance level at 1.3000 round, psychological number down to 1.2880 and here we can expect to see at least short term bearish moves, as a reaction to this resistance zone.

Looking at the MACD indicator, we can spot bearish hidden divergence formed. This is a confirmation for bearish pressure.

GBPCHF W1 weekly chart bearish hidden divergence resistance

GBPCHF D1 (Daily) Chart – Fibonacci Expansion 100% Level, Bearish Divergence, Weekly And Monthly Pivot Points

The weekly hidden bearish divergence that we spotted on the higher time frame is confirmed with regular bearish divergence on the D1 chart again using the MACD indicator.

Plotting a Fibonacci expansion from the swing low at August 13th 2019 versus the swing high at September 18th 2019 we get the 100% Fibonacci expansion right at the bottom of the weekly resistance zone we found above. That makes this level an even stronger resistance and the price action around it confirms that statement. We saw a bounce of the price the first time we reached that level on the 17th of October 17th then another rejection followed where the current swing high is being formed.

GBPCHF D1 fibonacci expansion 100, bearish divergence, weekly pivot point, monthly pivot point

A monthly pivot point is found at 1.2850 and just a few pips below it we find the weekly support one (derived from weekly pivot points) at 1.283773. The yellow rectangle marks that critical zone and we can see the previous daily bar closed below it which is another confirmation for the bearish pressure.

GBPCHF Weekly and Monthly Pivot points

GBPCHF H4 (4 Hours) Chart – Bearish Divergence, Double Top Pattern,
Up Trend Line Breakout, Bollinger Bands

In the first image below we see double top pattern formed between the swing highs on November 28th and  November 29th. Bearish divergence supported the pattern and we saw a massive sell off right after that.

The critical swing low at 1.2870 was broken, and the bearish pressure and momentum was confirmed.

GBPCHF H4 double top pattern, bearish divergence

Another bearish confirmation came with the breakout of the H4 chart up trend line. As per the book setup formed here, once the price re-tested the broken trend line and at the moment is continuing lower.

On another hand we got a close below the lower Bollinger Band which supports the bearish view.

GBPCHF H4 chart trend line breakout bollinger bands

I expect short-mid term bearish trend to develop now with 1.2690 being a critical supportive zone which is also the previous swing low on the daily chart.

The stop loss in this case could be tricky as the last swing high is pretty far away.

IMPORTANT – NFP (Non-Farm Payrolls) is due this Friday! If you don’t know what NFP is and why is it important, read this article.

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GBPCHF Technical Analysis & Forecast Summary

Lets recap and summarize the analysis we had so far:

GBPCHF W1 (Weekly) Chart:

  • Hidden Bearish Divergence, Key Resistance Level.

GBPCHF D1 (Daily) chart

  • Fibonacci Expansion 100% Level, Bearish Divergence, Weekly And Monthly Pivot Points.

GBPCHF H4 (4 Hours) Chart

  • Bearish Divergence, Double Top Pattern, Up Trend Line Breakout, Bollinger Bands.



Happy trading!

Yordan Kuzmanov
Chief Trader at the Traders Academy Club

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Vladimir Ribakov
9 months ago

Thanks for the feedback guys

9 months ago

I appreciate it .

9 months ago

Thank you so much for sharing your ideas here. Great job guys