Bearish Sentiment Dominates GBP/CHF Amid Key Breakouts

By Tomasz Wisniewski|

Published: June 05 2024, 08:03 GMT+0

Bearish Sentiment Dominates GBP/CHF Amid Key Breakouts

A lot is happening on the British Pound to Swiss Franc (GBP/CHF) chart, so let’s unpack the situation. First, we see a false bullish breakout above the key resistance marked with a yellow area, significant in December 2022, June 2023, and April this year. This false breakout, highlighted in orange, is a clear sell signal as the price fell below this area.

Currently, the price is undergoing a bullish correction, attempting to defend the black uptrend line that connects lows from December 2023. However, the main sentiment remains negative as long as the price stays below the yellow resistance area. The short-term sentiment might be positive due to the test of the uptrend line, but the overarching trend is bearish.

The potential target after breaking the black uptrend line lies at the 50% Fibonacci retracement level, marked in green, which also served as resistance in September, October, and November of the previous year and in February this year. Thus, if the price closes a day below the black line, we will have a strong sell signal with the green area as the target. Conversely, we currently have a short-term buy signal aiming for the yellow resistance area, but overall, the sentiment remains negative as long as we are below the yellow resistance.