GBPCHF Bullish Correction Opportunity

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GBPCHF is trending higher on is 4-hour chart as price formed higher lows and higher highs inside a rising channel. Price is testing that mid-channel area of interest that might be enough to keep losses in check.

This lines up with the 50% Fibonacci retracement level, as well as a former resistance area that might hold as support. If so, GBPCHF could recover to the swing high around 1.2035 or the channel top next.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that the climb is more likely to pick up than to reverse. The 100 SMA also seems to be holding as dynamic support at the moment, but a larger correction could still test the 200 SMA closer to the channel bottom at 1.1850.

RSI appears to be pulling up to reflect a return in bullish pressure without even indicating oversold conditions. Stochastic is also bottoming out after dipping close to the oversold region, suggesting that buyers are ready to return.

The BOE decided to keep interest rates and asset purchases unchanged as expected in their latest policy meeting. Officials highlighted a few positive developments in the economy recently but remained wary of further downside stemming from the pandemic and Brexit risks.

A bit of risk-taking can be seen in financial markets as there has been talk of vaccine developments and stimulus efforts. This weighs on the safe-haven franc, along with threats of intervention by SNB officials.

A continuation of risk-on flows could keep lifting the pound versus the franc, and the upcoming NFP release might also have an indirect effect. Strong figures could reassure investors that a global recovery is underway, likely lifting demand for riskier holdings while spurring profit-taking for lower-yielding ones.

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