Hi there, Traders.
Since the year 2000 the GBPCHF has experienced a significant long-term bearish trend, and we’re presented with a potential continuation pattern, that if confirmed should see price decline even further, perhaps even to (and beyond) all-time lows for this pair.
Now, whilst that possibility of all-time lows is some distance away, there is the potential opportunity to take advantage of the existing downtrend. What we’re seeing here is the formation of a rising wedge pattern which when confirmed within an existing downtrend is a continuation pattern, so we could expect to see lower prices once price breaks down.
Let’s take a look at the rising wedge on our weekly GBPCHF chart. Our upper trendline has acted as resistance several times over the past 18 months, but at present you’ll notice that the current weekly candle appears quite strong. If we see a weekly close above our trendline, our setup will be invalidated. Should price reject the upper TL of the wedge, we can potentially see a retracement to our rising support line, or even to recent weekly lows.
Zooming out to around 10 years of chart data, you can see that price has been in a significant downtrend for quite some time. While there is the possibility that this is a long-term bottoming pattern, the formation of a bearish rising wedge is indeed present and could indicate lower prices over the long-term.
It’s important to remember that this is potentially a very long-term trading opportunity, and when trading weekly timeframes it’s important to carefully consider risk and position sizing because of the presence larger swings in price.
It’ll be interesting to see how this plays our over the coming weeks/months.
As always, stick to your stops and I’ll catch you next time, traders.
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Source: Vantage FX Blog