In the Aug 26th email on $/swiss, said despite the market just above support at the falling trendline from mid July, the near term downside pattern was not "complete", raising the potential for a downside break (and possible acceleration lower). Sold there (then at 1.0250), and the market has indeed broken and closed below that falling trendline (now resistance, currently at 1.0195/10, see daily chart below). However, the inability to accelerate lower (at least so far) and the approach of longer term support (see longer term below), are rising concerns to this short position. So for now, would continue to use a close above the bearish trendline from June (currently at 1.0310/25) as a sign to stop. Nearby support is seen at 1.0055/70 (yesterday's low) and the longer term .9985/10 area.
Longer term, the market remains within the large, triangle type consolidation since the Nov 2005 high at 1.3280, currently approaching the base/bull trendline from March 2008 (currently at .9985/10). Under "normal" circumstances, would expect this area to hold for at least a month (and likely more), and provide gains potentially all the way back to the ceiling (currently at 1.1650/00). Note too that there is scope for a few weeks of potentially sharp gains in "risk" markets (equities, a$, kiwi, etc.) as part of a longer term topping, and in turn could lead to a reversal of the recent safe haven buying in swiss (provide $/swiss support). But in the bigger picture given the broader bearish view for the US$ out the next number of months, it's hard to imagine such a significant upmove in $/swiss (all the way to the ceiling). This in turn suggests that if this area does indeed hold, the upside may be much more muted (6-7 big figures, see "ideal" scenario in red on weekly chart/2nd chart below). However, don't want to get too far ahead of ourselves as there are no signs of even a short term bottom so far. For now, would maintain the longer term neutral until better indications of how the market reacts to this longer term support area emerges.
Longer term, the market remains within the large, triangle type consolidation since the Nov 2005 high at 1.3280, currently approaching the base/bull trendline from March 2008 (currently at .9985/10). Under "normal" circumstances, would expect this area to hold for at least a month (and likely more), and provide gains potentially all the way back to the ceiling (currently at 1.1650/00). Note too that there is scope for a few weeks of potentially sharp gains in "risk" markets (equities, a$, kiwi, etc.) as part of a longer term topping, and in turn could lead to a reversal of the recent safe haven buying in swiss (provide $/swiss support). But in the bigger picture given the broader bearish view for the US$ out the next number of months, it's hard to imagine such a significant upmove in $/swiss (all the way to the ceiling). This in turn suggests that if this area does indeed hold, the upside may be much more muted (6-7 big figures, see "ideal" scenario in red on weekly chart/2nd chart below). However, don't want to get too far ahead of ourselves as there are no signs of even a short term bottom so far. For now, would maintain the longer term neutral until better indications of how the market reacts to this longer term support area emerges.
