The GBPCHF cross pair failed to consistently break the pivotal 1.20. After months-long consolidating just below the level, it gave it a try at the end of last month.
However, it keeps a close eye on it and, judging by the price action, it looks poised to try again. This is especially important because this week, the Bank of England (BOE) is set to deliver its monetary policy outlook and decision.
As usual, the NFP week is filled with PMIs data from all over the world. If the Eurozone or the American PMIs both beat expectations, the Swiss PMI did not.
Not only that it did not meet expectations, but it came out below the 50 level. In other words, it signals still a contractionary sector – 49.2 on expected 50.0.
In contrast, the final services PMI in the United Kingdom came in at a strong 56.5. As the United Kingdom is a service-based economy, it shows a strong comeback in the makings.
But, despite weaker than expected data out of Switzerland and stronger one out of the United Kingdom, the GBPCHF cross fails to catch a bid tone. Technical levels still matter, as well as the CHF safe-haven nature.
The technical picture for the cross remains unchanged. After a strong rejection at the lows in March, the cross met 1.20, and all bullish activity stopped.
However, it keeps building energy to pop higher, and the aim here is to catch the upcoming bullish trend. To do that, a trader must wait for the price to break first, and then jump on the long side.
As such, the trading plan requires the price to move back above the 1.20 and make a new marginal higher high. Effectively, it means placing a pending buy stop order at 1.2050. Or simply wait for the price to reach that level and go long at the market. Next, place a stop-loss order two hundred pips below so to avoid a new slip back below the 1.20. Finally, target 1:3 risk-reward ratio as the measured move for the potential continuation pattern is more than enough to deliver such return.
