Back on September 5th, I wrote this post discussing how the Swiss Franc had become the consummate safe haven in the midst of turmoil in the European Union. The stronger the “Swissie” became–especially versus the Euro–the more we knew bad things loomed. In particular, monitoring the Euro/Swissie cross had become the focal point for many traders seeking to gauge just how pervasive risk aversion had become. If you look at that post, you will note the weekly chart that I posted with a large hammer candlestick, indicating a potential upside reversal in the works.
Since that post, the Swissie has indeed weakened versus the Euro, and the hammer was confirmed. The issue now is whether we have just witnessed a relatively insignificant countertrend rally, or rather if we have just seen a major bottom to the safe haven trade in Europe. To be sure, the Euro bulls are going to have to put in a higher low in order to make progress in changing the primary trend. Beyond that, though, you are looking to see the bulls reclaim a key area of prior support that gave way into becoming resistance.
On the updated weekly chart below, you can see via the light blue line that reference point is the 1.23/1.24. The first touch of it was rejected last week, which is normal. In my estimation, that area will be a huge battleground that Euro bears will defend vigorously. Above it, then the height of the flight into Swssie’s may very well have been reached over the summer.
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My favorite Swiss Beatle was Ringovar Starrgloch.
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Indeud
The decline of the Swiss Franc immediately after the SNB’s move to announce a “floor” under the EUR/CHF at 1.20 was probably the fastest and largest single currency move in the history of major currency movements since floating. This should make all market participants think long and hard about “safe havens”.
In this past week, the decline in gold prices has been dramatic, exhibiting the largest weekly fall since 1983. Not bad for a safe haven? Following the reversal of the Swiss Franc’s strength, it is tempting to explore the idea that the “crisis” might be coming to an end and, indeed, when one looks at the value on offer in equity markets and the inevitability of some major G20 policy response, it is not just idle temptation. For now, it is perhaps wiser to assume the gold decline is a savage correction, but it could be the end of its rally. It certainly has experienced some damage to many chart technicians’ views.
Read more: http://www.businessinsider.com/goldman-jim-oneill-safe-havens-2011-9#ixzz1YzeOiCfC
Hey Chess, Off topic, but when I use freestockcharts.com to make this kind of chart, sometimes when I try to put in the moving averages, it just gives me these straight lines that seem to have no relation to the price action. Is this software glitchy when it comes to the ma’s or is there probably something I’m doing wrong? It seems you always have the averages set up nicely in the charts you use here. Any advice for avoiding this problem would be appreciated. Thanks.
make sure you click on the “add indicator” button for each separate moving average you want to create, as opposed to clicking on the previous moving average you set up