CHFGBP breaks below key technical support level
Swiss Franc/British Pound (CHFGBP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CHFGBP ended the month -1.67% lower at 0.8370 after losing 30 pips (-0.36%) today on high volume. Today's close at 0.8370 marks the lowest recorded closing price since June 16th. Closing below Thursday's low at 0.8386, CHF/GBP confirmed its breakout through the previous session low after trading up to 55 pips below it intraday.
Daily Candlestick Chart (CHFGBP as at Jul 31, 2020):
Friday's trading range has been 80 pips (0.95%), that's above the last trading month's daily average range of 63 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CHFGBP.
Prices are trading close to the key technical support level at 0.8324 (S1). Prices broke below the key technical support level at 0.8379 (now R1), which is likely to act as resistance going forward. The last time this happened on Monday, CHFGBP lost -0.18% on the following trading day.
Crossing below the lower Bollinger Band for the first time since June 8th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 0.8441 or signal the beginning of a strong momentum breakout leading to even lower prices.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the lower Bollinger Band" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for CHF/GBP. Out of 86 times, CHFGBP closed higher 51.16% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 54.65% with an average market move of 0.52%.