Magazine article Modern Trader

Swiss Bull/bear Debate

Magazine article Modern Trader

Swiss Bull/bear Debate

Article excerpt

The Swiss franc rallied off its July lows of 6331 (basis the September contract). Causing many technicians to believe a major low was in place and that a new bull market was underway. These two charts provide a longer-term perspective of the Swiss moves since the early 1980s and in recent years. We are going to analyze the charts in terms of Elliott wave structure.

As can be seen from the monthly chart, the Swiss franc completed a multiple year bear move in February 1985 at 3408 before making a bull market advance that terminated in April of 1995 at 8973. The 11-year bull market was completed within an orderly, well-defined five wave Elliott structure.

Since April 1995, the Swiss was in a bear market that may have climaxed in July of this year at a major eight-year support zone in the 6300 to 6500 area. As the monthly chart shows, these major lows were just short of a 50% Fibonacci retracement level at 6220 and that while the July low of 6331 breached the 1992, 1993 and 1997 lows, it failed to breach the 1991 low near 6220.

The ensuing rally scores an outside-up monthly key reversal on the charts and is flashing signs the major four-year bear market completed its five wave structure and is on the verge of rallying to the first major resistance at 0.382 retracement levels (representing 0.382 retracement of the April 1995 high to the July 1999 low, 7343 on the weekly charts) and the bear trendline.

The bear case can be summarized in four words: Massive Head and Shoulders. …

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