(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)

2/19/2008 – GBP/CHF – The GBP/CHF daily chart, as shown, is continuing to display a horizontal trading range that just won’t quit, much like other currently consolidating sterling crosses. This approximately 500-pip range span has upper and lower horizontal borders that have been hit at least five times each. In retrospect, this price action has represented a solid range-trading opportunity in the past month or so, as the two sides of the range are so clear and well-defined. At the same time, however, it may be viewed as even a better breakout-trading opportunity. Price has been confined in these comparatively low volatility conditions for more than a month now, so any true breakout with momentum should take the pair relatively far in one general direction. Indeed, we can see that the two previous consolidations visible on the chart (both of which were triangles) resulted in rather fast and drastic, uni-directional price moves. A breakout above the current horizontal range should target initial resistance around the 38.2% Fibonacci retracement level (the high-to-low retracement span being measured from the swing high on 12/12/2007 to the current range low). On a breakdown below the range, however, there is not much in the way of known support to the downside, as price has not reached these depths for many years.

James Chen

Chief Technical Analyst

FX Solutions

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