Price action on the GBP/CHF has been wild to say the least recently. The trading has certainly been erratic from a pricing perspective, and we believe that this volatility is set to continue. However, over the past few months, if you've been following the 4 Hourly charts, there seems to have been a double bottom pattern forming which is relatively strong.
The first spike low of the double bottom comes in at 1.5365. This is the candle low of a single four hourly bar. Following this bar, the currency pair put in a solid performance and rallied all the way up to 1.6000 – a strong psychological level.
However, since reaching that level last week, the GBP/CHF has sold off once more, to the point where it is now approaching the low once again. Could this be a double bottom forming in action? We believe that given the strengths of both the GBP and the CHF, there is a high likelihood that indeed the currency will once again reverse and head higher.
There are a number of things which are pointing towards this being the likely outcome. Firstly, the %R indicator, which is almost always a reliable oscillator to use on this currency pair – is oversold. This indicates that the currency pair could indeed be in for a correction in the near term. However, whilst this is certainly a convincing factor, it is definitely not the only thing which is leading us to believe that a trend reversal is about to occur.
Over the past 2 years, double bottoms have formed on almost every currency pair out there. They are simply a fact of technical analysis and they are a very reliable measurement of future price action.
However, if you look at double bottoms from a statistical perspective, you will see that if you had been trading the double bottoms which formed on the GBP/CHF currency pair, you would have had the most success. That's right – when it comes to double bottom chart set ups, the GBP/CHF is definitely the most accurate currency pair to base your trades off.
So – where are we targeting for this currency pair trade in the near future? We believe that in the short term, a bounce up to 1.5700 could definitely be on the cards. If this point is reached, we believe that – depending on momentum – the price could return all the way to the 1.600 high that was set last week, and potentially surpass this also.
To curb risk, we have placed a stop loss order below the first spike low at 1.5320 – which should provide enough space to allow for any "false" breakouts to occur, without it affecting our double bottom prediction.
The first spike low of the double bottom comes in at 1.5365. This is the candle low of a single four hourly bar. Following this bar, the currency pair put in a solid performance and rallied all the way up to 1.6000 – a strong psychological level.
However, since reaching that level last week, the GBP/CHF has sold off once more, to the point where it is now approaching the low once again. Could this be a double bottom forming in action? We believe that given the strengths of both the GBP and the CHF, there is a high likelihood that indeed the currency will once again reverse and head higher.
There are a number of things which are pointing towards this being the likely outcome. Firstly, the %R indicator, which is almost always a reliable oscillator to use on this currency pair – is oversold. This indicates that the currency pair could indeed be in for a correction in the near term. However, whilst this is certainly a convincing factor, it is definitely not the only thing which is leading us to believe that a trend reversal is about to occur.
Over the past 2 years, double bottoms have formed on almost every currency pair out there. They are simply a fact of technical analysis and they are a very reliable measurement of future price action.
However, if you look at double bottoms from a statistical perspective, you will see that if you had been trading the double bottoms which formed on the GBP/CHF currency pair, you would have had the most success. That's right – when it comes to double bottom chart set ups, the GBP/CHF is definitely the most accurate currency pair to base your trades off.
So – where are we targeting for this currency pair trade in the near future? We believe that in the short term, a bounce up to 1.5700 could definitely be on the cards. If this point is reached, we believe that – depending on momentum – the price could return all the way to the 1.600 high that was set last week, and potentially surpass this also.
To curb risk, we have placed a stop loss order below the first spike low at 1.5320 – which should provide enough space to allow for any "false" breakouts to occur, without it affecting our double bottom prediction.
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