There is a nice reversal happening in this pair from my analysis point of view. While the GBP has been on a downtrend since mid-last or there about, the general trend is bullish and that is why there is room for higher highs. First, in the daily chart we can notice that buyers are rejecting lower lows below 1.3, a round number which is right at the 61.8% Fibonacci retracement level. While we can enter long right away, it’s better to wait for higher highs and a close above 1.313 say by February 8 will only assert our bullish view. After all, the secondary chart shows that bear momentum is actually tapering off and if today closes as a bull, a buy signal might be printed which is good news.
In the 4HR chart, GBP was under-valued on February 6 when a whole bullish candlestick closed below the lower BB. Now, despite the minor consolidation and higher highs relative to the lower BB, we need prices to surge above 1.3130 as mentioned above for us to even think of trading.
Given these conditions, it means our GBPCHF trade plan will be as follows:
Buy Stop: 1.3130
Stop Loss: 1.30-below 61.8% Fibonacci retracement in the daily chart
Take Profit: 1.3460-January 2018 highs.
Let me know what you guys think.