An extension of the Brexit transition period is now being considered, due to the global pandemic of Covid-19. The UK has until June 30 to make a formal request for a two-year extension. Such a move will force the UK to accept EU rules, which has been ruled out by the Johnson government. The current transition period ends on December 31, and the UK has previously noted that preparations for a WTO-like trade environment begin if no progress is made by June. Given the global disruption caused by the virus, a limited extension cannot be excluded, but it can be much less than two years. It can simply cover the lost time imposed by Covid-19. GBP / CHF should use its increasing level of 38.2 Fibonacci retracement fan support to accelerate further upward.
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The force index, a new generation technical indicator, fell from its peak but was able to rebound on its level of horizontal support. Upward pressures are reinforced by the upward support level, while the downward resistance level serves as temporary support, as indicated by the green rectangle. The Force index is favored to push higher, driving the GBP / CHF to a new high over several months. Bulls remain in control of price action with this technical indicator in positive territory.
This currency pair went into lateral drift after completing a break above its short term resistance zone, converting it into support. This area is located between 1.17124 and 1.18267, identified by the gray rectangle. On April 5, Elizabeth II, the Queen of the United Kingdom and the other Commonwealth kingdoms delivered a rare televised address to thank NHS staff and underscore the importance of self-isolation, unity and determination. Her Majesty’s involvement in the nation’s inspiration points to even greater challenges. The UK is in a better position to weather the economic turmoil, giving the GBP / CHF a fundamental bullish catalyst. You can find out more about a resistance zone here.
An essential level to monitor is the intraday maximum of 1.20862, the current peak of the advance and the end point of the redrawn Fibonacci retracement ventilator sequence. A sustained breakout will bring the GBP / CHF into its resistance zone between 1.22443 and 1.23360, marked by the red rectangle. The upward momentum should be enough to raise the price action in its next resistance zone, which waits between 1.2516 and 1.25883. Volatility is expected to increase with the release of March economic data.
Technical configuration of GBP / CHF trading – Breakout extension scenario
- Long entry @ 1.20300
- Take Profit @ 1.25800
- Stop Loss @ 1.19000
- Upward potential: 550 pips
- Downside risk: 130 pips
- Risk / reward ratio: 4.23
If the Force index corrects below its rising support level, the GBP / CHF should experience short-term selling pressure. While Switzerland is making efforts to support small and medium-sized enterprises, overtaking most of the dominant economies in this category, the United Kingdom has implemented more substantial stimulus measures. ThThe downside potential remains limited to its level of support for the 61.8 Fibonacci retracement fans, and Forex traders are invited to take advantage of this development with new buy orders.
Technical configuration of GBP / CHF trading – Limited correction scenario
- Short entry @ 1.18200
- Take Profit @ 1.16400
- Stop Loss @ 1.19000
- Drop potential: 180 pips
- Upside risk: 80 pips
- Risk / reward ratio: 2.25