GBPCHF tumbled from 1.3400 on May 3, after failing to break above a previous ten-month high. The pair paused slightly around the sixteen-month low of 1.2292, before reviving the down move past 1.1864, being the 138.2% Fibo extension level of the up leg from 1.2292 to 1.3420.
The MACD indicator crossed underneath its red trigger line in the negative territory and is showing some acceleration of bearish directional momentum. The ADX agrees, suggesting a strong bearish trend is in place, but warns of a possible correction in the short-term. The Chikou span also confirms the strength in the three-month period drop, from 1.3400.
Extending losses could bring to the table the 1.1704 support from October 2 of 2016. If sellers increase the potency of their push south breaching the October low, focus falls to the August 2011 lows of 1.1464, once the 1.1603 level is surpassed, which is the 161.8% Fibo extension level.
In a scenario of a pullback upwards, resistance comes at the psychological 1.2100 level from January 2017. Pushing higher, the 1.2170 resistance, which is the 23.6% Fibo of the drop from 1.3400 to 1.1793, needs to be breached, before seeing 1.2292. Once friction to the upside is avoided from 1.2405, which is the 38.2% Fibo, the 1.2500 resistance would need to be cleared to turn the medium-term outlook back to neutral.
Summarizing, the pair in the short-term has a bearish bias, but traders need to be aware of over extension in the move.
