The GBP/CHF pair rose during the session on Wednesday, testing the 1.48 level yet again. This level has offered resistance lately, but in the end, I believe it will eventually be overcome. After all, we've seen a nice move higher, and this pullback is relatively minor. Once you look at the entirety of the range for the session. A move above the 1.48 level on a daily close has is buying this market going higher, possibly to the 1.50 level.
It really isn't until we break down below the 1.45 handle that I even begin to think about selling, and at that point time I see quite a bit of support below is well, so quite frankly, I am essentially in "buy only" mode. Because of this, I have simply been looking for the breakout to the upside in order to not only put a position on, but start to think about the possibility of a "buy and hold" position.
European economic weakness.
It may be a bit odd to think about the fact that the European Central Bank having a surprise rate cut the other day would have such a drastic effect on this pair going forward, but you have to realize that Switzerland sends almost all of its exports into the European Union. With that being the case, it makes sense that it would hurt the value of the Swiss franc as the Swiss economy will certainly have to worry about whether or not its European neighbors can afford its products. Because of this, it makes sense that a more self-sustaining economy like the United Kingdom may possibly benefit from the "lesser of two evils" that this pair has essentially become.
I think that the inevitable breakout happened soon, and as a result this highly volatile pair will take off to the upside rather rapidly. This is one of my favorite pairs to play as far as volatility is concerned, and that being the case, a position to the upside should do quite well over the course of the next several weeks.
