The GBPCHF daily chart clearly shows a strong downtrend in place, with very aggressive bearish momentum. It’s important as traders tend to wait for signs of strength, before selling into weak markets. A counter trend retracement provided a golden opportunity for short positions at close of the last New York session.
The market regained some of its losses and retraced back up into a price level, which previously acted as support. The move into this level was denied, and the candle closed as a bearish pin bar. The long upper wick demonstrates the level is now holding as resistance, and also confirming to us price action traders this level is now acting as a swing point within the trend.
If lower prices develop off the back of this bearish swing signal, we could see the next overall bearish extension of this downtrend.