$/Swiss, Still Short But Risk Starting to Rise.....

Nearer term in the May 22nd email on $/swiss, affirmed the short position (resold on May 4th at 1.1320) and the market has continued lower, currently trading near levels not seen since last Dec. Though there are still no signs of even a short term bottom “pattern-wise” raising scope for further downside, the market may be forming a falling wedge-like pattern for over the last month (generally seen as a bottoming pattern). Note too that the market is oversold after the sharp declines since April and argues that the risk in being short is starting to rise. So for now to compensate for this rising risk (and maintain a good overall risk/reward), would use a more aggressive stop on a close above the bearish trendline from mid May (currently at 1.1850). Resistance before there is seen at 1.0735/50 (earlier high, previously broken falling support line since March, and also the bullish trendline from Dec) while nearby support is seen at the base of the possible wedge (currently at 1.0555/75).

No change in the longer term bearish view in $/swiss that has been place since early in the year, as the 5 wave fall from the Nov high at 1.2295 (see numbering on weekly chart below) continues to argue that the bigger picture downside pattern is not “complete”, and with eventual declines back to the Dec low at 1.0375 and even below still favored. Note that risk may be starting to rise for a nearer term bottom (see shorter term above), but there are no signs of a more important low. So for now, would maintain the longer term bearish bias that has been in place since March 13th (then at 1.1900). Not much in the way of longer term support until the Dec low at 1.0375, while resistance is at the recently broken bullish trendline from Dec (currently at 1.0740/55).

David Solin
Foreign Exchange Analytics
http://www.fxa.com

Disclaimer: The opinions expressed herein are those of the author and not a recommendation to buy or sell specific securities.