The relationship between the Euro and Swiss Franc should command your attention, as the pertinent issue for markets seems to be just how naughty things will get over in the euro zone. The “Swissie” is serving as the ultimate safe haven, and the weekly chart below of the currency pair shows an established and powerful downtrend over the past few years.
A few weeks ago, the pair experienced what appears to be an exhaustion of sellers as seen in the massive hammer candlestick below, as the Euro fell near parity. The fact that this is a weekly timeframe raises the stakes even more that we have already seen a washout in the Euro versus the Swissie, and by proxy a culmination in fear and the end of this downtrend. At the very least, if the lion’s share of the gains made by the Euro since making a temporary bottom in August continue to hold, that long-shadowed hammer will be looking more and more viable as a good low.