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GBP/CHF Potential Trend Line Bounce (June 20, 2014)
GBP/CHF’s uptrend is still intact, as seen on the 4-hour forex chart with an ascending trend line connecting price lows. Stochastic still hasn’t reached the oversold zone, which suggests that a deeper pullback might happen before the rally resumes.
At the same time, the 100 and 200 simple moving averages are in line with the rising trend line, making it a strong potential support zone. A bounce off the 1.5100 major psychological level, which coincides with a shorter-term broken resistance area, could lead to a rally up to the previous highs at 1.5300.
Going long at 1.5100 with a stop below 1.5000 and a target of 1.5300 could yield a 2:1 return on risk. Aiming for new highs could improve the reward potential but it would be prudent to adjust the stop to entry once price tests the previous highs.
By Kate Curtis from Trader's Way
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