Looking for setups to start your trading week?
While we’re waiting for top-tier data releases, check out GBP/CHF possibly extending its trend!
Lemme show you what’s up in the 1-hour time frame:
As you can see, GBP/CHF has been making lower highs and lower lows since late August when the U.K.’s inflation showed a cooldown in July and BOE Governor Bailey said that they’re nearly over their “we clearly need tighter policies” phase.
The pair is now trading near the 1.1125 zone after bouncing from its 1.1080 intraday lows.
Can GBP/CHF extend its downtrend?
Traders will keep close tabs on tomorrow’s U.K. CPI report, which is expected to show a faster headline reading and a sticky high core CPI.
Both the BOE and SNB will also publish their monetary policy decisions later this week and both central banks are expected to raise their interest rates.
But while higher interest rates usually attract currency bulls, GBP may not get as much support when traders move on to worrying about how further rate hikes may affect the U.K.’s growth trajectory.
If traders focus on the U.K.’s slower growth prospects, then GBP/CHF may extend its downtrend. The pair could see enough selling pressure to revisit its 1.1080 lows or make new monthly lows in the next few days.
Planning on trading GBP/CHF’s trend?
You can wait for bullish candlesticks to reach the 1.1130 Pivot Point / SMA area. Just make sure that there are no fundamental catalysts for the bullish candlesticks if you do see them!
If you’d rather short the current downswing, then you can take advantage of the rejection from the mid-channel resistance line and aim for GBP/CHF’s previous lows.
Whichever strategy you choose, make sure to use stop losses and to follow your trading plan so that you don’t lose your shirt!