The Canadian Technician

An Important Time For Major Currencies - Chapter 6 - The Swiss Franc

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The Swiss Franc ($XSF) is an important currency in Europe. During the Greek crisis back in 2011, the Swiss Franc soared in the heat of the crisis. It immediately plummeted back. It was a goto currency in times of stress, but it also mimics some of the other European currencies. Let's look at the long cycle weekly first.

We can see that the Swiss currency has become more valuable since the Y2K top in the equity markets. The Swiss Franc was in a down trend and reverted to an up trend at the turn of the century. There was some long term resistance marked at 88 based on the peak in 2005. More importantly, the Swiss Franc had money moving to it during the early parts of the financial crisis in 2008, but really started plummeting in the 3rd quarter 2008. As the US equity markets topped in the financial crisis, the Swiss Franc broke through resistance going up. It rolled over and fell below the established uptrend line in late 2008, early 2009  and retested the low in 2010. The 85-100 level was the dominate range during the financial crisis through 2010. 

The Swiss Franc went on a run to the moon with a massive spire top in mid 2011. In one year the $XSF went from 85 to 140, with the final week being over 10 cents in exchange or $10 on this chart. Wow that can only be called a blow off top.  The chart from 2001 to 2012 reminds me of Gold, but that is another tangent.  For 2012 to 2013, the price stabilized around 100-110 after gapping down out of the spire top. Since the latter half of 2013, we saw the Swiss Franc break above the 110 level and push up to 115. Now it is back looking for support at 110. The RSI is still on a bull signal, but the indicator is right at the low end of support.

The MACD finally moved above the zero line in mid 2013 and now sits just above the zero line. It has broken the 2 year long MACD trend line shown in blue. 

So the big picture is the Swiss Franc is in a 13 year uptrend and currently near the support line for the trend. What happens next? Lets zoom in on the shorter weekly chart.

It gets a little busy, but look at the RSI first. The recent push down is the weakest in a year so this is very important. If the Swissie is going to stay in trend, it will have to bounce very soon. Moving down to price, I have drawn horizontal support in orange. It is also the junction of the up trend line and the 65 week MA.  I would suggest the Franc is at a critical level here. If it breaks, it would imply significant weakness. There is a case for the last year above the orange line to be a head/shoulders topping pattern, especially with the junction of the trend line and the 65 week moving average all marking the right side termination point of the pattern. We'll zoom in on that on the daily after we finish Chart 2.

We can see the MACD didn't make a strong push above the zero line, but we are testing that zero line support right now. I would suggest the weekly chart points to a critical long term junction now. Onto the daily.

The Daily RSI has moved down to 30 so it is a bear market signal, but I place more emphasis on the weekly RSI. The bottom line is this does look weak after staying above the 40 level for the whole move up. The Head/Shoulders topping structure we see is an important trend change. The Orange line has been fine tuned up to the 111 level rather than the 110 on the weekly.  A break below the brown line or the 300 DMA would be very important and would also break the thick blue uptrend on the weekly. The test of 110 will be watched by many currency traders. Should that long term support fail to hold, the most probable level is the 100 level to look for next support based on the weekly above.

The MACD looks like it was unable to climb above zero in July. We'll watch closely to see what happens on the test of 110 but currently it looks bearish.

Another major currency ($XSF)  is at a critical chart level. Next we'll cover the Euro.

If you missed any of the other currencies like the Yen, the Aussie, The Canadian Dollar, The Swedish Krona,  or the British Pound,  you can find them by going to The Canadian Technician page by following this link.

Good trading,

Greg Schnell, CMT

 

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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