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Forex pairs in this Article » GBP/CHF, GBP/USD
By: DailyForex.com

The GBP/CHF pair had a strong session on Friday as the hammer that formed on Thursday triggered a buying spree. The 200 day exponential moving average also found itself parked firmly below that price action, and as such we saw strength come back into this market that was so strong previously. The pair had been strong previously, and so much so that it was even reported that the Swiss National Bank was buying Pounds and selling Francs. This was part of their diversification strategy, and the markets ate it up. The pair tends to follow risk sentiment in the long run, as the Franc had traditionally been thought of as a "safe haven" trade. The pair would risk rapidly in good times, only to fall just as much in bad times. Carry trade, and general bullishness The pair does have a positive swap, and was one of the favorite pairs for carry traders before the financial crisis. While the wild bullishness is gone, the fact is that this world offers very little in the form of yield brings traders to the long side of this pair over time. The 1.50 level is an obvious one on longer-term charts, and the very magnitude of the number would have me interested in the reaction to it. After all, there are few places on a chart that are more "round number" than a 1.5 print. Couple that with the 200 day exponential moving average and the hammer that bounced from it, I feel that this market is primed to see a return to the former bullishness.

The bottom of the Thursday candle also had bounced off of a weekly trend line, and as such I simply find far too many reasons to buy this pair, and will do so on a pullback as I plan on holding it for some time. I have no base case to sell at the moment, and I cannot help but notice that the weekly candle on the GBP/USD is also showing a significant hammer. For me, I think we are getting ready to see Pound strength now.

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