GBP/CHF has been sliding since Wednesday, and today, it managed to fall below the upside support line taken from the low of Oct. 1 and the 1.2657 barrier, marked by the low of Oct. 18.
In our view, this has confirmed the completion non-failure swing top, which, combined with the dip below the upside line, constitutes a trend reversal signal.
We believe that the dip below 1.2657 may have opened the door towards the low of Oct. 14, at 1.2593. The bears may decide to take a break after testing that zone, thereby allowing a corrective bounce.
But if that stays short-lived below 1.2657, another round of selling could be possible, perhaps even below 1.2593.
We expect the break below 1.2593 to set the stage for declines towards the low of Oct. 1, at 1.2503.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50, slightly above 30, and points down.
It could fall below 30 soon. The MACD runs below both its zero and trigger lines, pointing down as well.
Both indicators detect strong downside momentum and corroborate our view for further declines in this exchange rate.
On the upside, we would like to see a recovery above 1.2718 before we start examining whether the bulls have stolen the bears’ swords.
The rate will already be well above the upside line, which may encourage advances towards Wednesday’s peak at 1.2763.
If the bulls are unwilling to give up at that zone and manage to break higher, we could see them climbing towards the peak of Sept. 17, at 1.2820.