Dollar-Swiss Up Against Short & Long Term Resistance

[For the complete and illustrated version of this and future Updates be sure to sign up at www.sevendaysahead.com] USD/CHF is currently one of the clearer charts to interpret. There are technical reasons for expecting bull fatigue to set in soon, with a pullback becoming more likely. If we are wrong then the inevitable surge through this resistance would itself provide a clear and useful signal.

MONTHLY CHART: Our interest currently lies in the bear channel top projection which combines with other resistances on the Weekly chart below. Meanwhile it is worth observing that a break through this would show that long term bear momentum was weakening. (Such a channel break has already taken place on the US Dollar Index – see our FX Guide for details)

WEEKLY CHART: Now things get more interesting – the channel top nicely coincides with two significant lows from 2006, 1.1879/1.1918, and the 61.8% level of 1.1905. The main case scenario (including further evidence from the Daily chart) calls for a decent corrective phase. BUT, if we are wrong, then the likelihood is of a powerful break higher, which can be turned to advantage. Now see the Daily chart.

DAILY CHART: S/term the trend is still seen as up. However, this year’s recovery has adopted a classic shape - we do not normally count Elliott waves but a 5th/final wave looks to be unfolding now. The essential implication is that bulls could be tiring. We have s/term Fibo projections marked in, besides the current s/term bull channel, and the expectation is that price gains will continue to be a struggle. We must still await bear signals, though, and, for now, remain onthe alert. We’ll be covering developments here in future editions of the weekly FX Trader’s Guide, as well as subsequent Updates.

Philip Allwright Mark Sturdy Seven Days Ahead