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GBPCHF Kijun Rejection Played Out Perfectly. Now what?
As we wrote in a previous post about the Sterling-Swiss;
“From here, should it bounce back, expect the 20ema and Kijun to hold the lines. In fact, if you are looking for a pullback entry, you could use either with the stops just above the red-line and then target the last major swing low for a great R:R trade.”
This is exactly what happened with the GBPCHF as it got within 6pips of the Kijun line, then sold off over a period of 2.5 days to today, touch the former lows like we suggested, shedding 315pips in the process with having nothing more than a 30pip stop, offering a 10:1 Reward-to-Risk trade. Hopefully you got in some of that.
But the question remains, ‘now what?’
Looking at the chart below, based on how well the 20ema is trekking lower, and the Kijun soundly rejected the last pullback, we expect any advances to continue being rejected by the Kijun as the pair looks for lower ground. The Kumo is daunting and immensely thick with no signs of receding so this does not bode well for any upside advances as they will have to fight through it to find any upper air. But also considering how the risk aversion theme is playing out so well in the markets and the Euro getting hammered, the CHF is looking like a fantastic alternative. Ultimately, until we see any sign of a reversal, we expect lower ground to be found with the pair continuously making new all-time lows month after month. Especially considering the pair has sold off for the last 6mos straight, nothing is showing us it will behave any differently. The 1st kink in the armor would be a close above the Kijun which has not happened since early April this year so until we see some dents in the aegis of the ichimoku formations behind this downtrend, we’ll continue to look for shorts on the pullbacks.
If you wanted to be brave, the current levels which do represent a double touch (not bottom) at 1.3260, then there is your line in the sand but make sure to keep tight stops considering this pair has sold off over 64% of all daily candles for the last 3+ mos.
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