GBPCHF is in the middle of a correction to its broken long-term ascending channel support where more sellers might be waiting to sustain the reversal. If so, the pair could make its way back down to the support zones marked by the Fibonacci extension tool.

The 100 SMA is below the longer-term 200 SMA on the daily time frame to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction from here. Also, the 200 SMA is around the area of interest at the broken channel support at 1.3100-1.3200 to add to its strength as resistance.

The 50% extension level lines up with the swing low, which might be the first take-profit point for sellers. Stronger selling pressure could take GBPCHF down to the 61.8% extension at 1.2270 or the 78.6% extension at 1.2030. The full extension is at the 1.1730 area.

Stochastic is already indicating overbought conditions on this time frame and looks ready to head south. This might take price along with it as sellers return at these levels. RSI is also heading lower without even hitting overbought territory, indicating that bears are eager to return.

The EU Summit is not looking too good for the UK at the moment as negotiating parties refuse to back down on demands regarding the Irish border backstop. However, the idea of extending the transition period by a year has been floated, giving the EU and the UK more time to iron out the trade and customs checks in the border.

PM May’s speech failed to rally much optimism as EU leaders appear disappointed that the UK hasn’t come up with fresh proposals on the matter. It has also been reported that Germany and France are making preparations for a “no deal” scenario, which would mean a lot of uncertainty for UK businesses. There have also been rumors that the special Brexit summit in November might not push through in the absence of any significant progress this week.