The GBP/CHF pair rose during the session on Tuesday, testing the 1.5350 region. However, I see the 1.54 level as being where we really need to test in order to decide where we go next. After all, it was the scene of quite a bit of resistance previously, and it is a large resistance barrier on the longer-term charts as well. With that, I believe that the market has a lot of thinking to do at this point.
The shooting star that formed a couple of weeks ago at this area suggests to me that the market will more than likely find quite a bit of selling pressure in that area. I think that a resistive candle in that area would be an excellent selling signal, and I would of course be short of the market at that point. You can see that the trend line that had been supporting the market previously has been broken, and we are now retesting the underneath of it. Now we have to figure out whether or not what had once been so supportive will now be resistive.
A massive point of inflection.
I believe that we are at a massive point of inflection, and as a result waiting to see what the daily close is going to be will be the best way to play this market. I would not be buying this market on a simple break above the 1.54 handle, simply because we could turn around and form yet another shooting star the same level. On the other hand, if we pull back from this area, I would not be quick to jump into the trade until we formed a daily candle that told us to start selling.
I believe that a break below the 1.52 level would erase almost all doubts in the minds of the sellers, and the market would more than likely accelerate to the downside at that point, probably aiming for the 1.50 handle. On the other and, if we do get above the 1.54 level, I believe that a break above the 1.55 level would in fact be a long-term buy-and-hold signal.