Swiss Franc Weekly Update and May 2011 Monthly Overview - April 29 close

EURCHF

May 2011 Overview

This pair retraced a little bit higher after breaking the monthly descending channel, reaching near the 61.8% retracement on previous swing low; however price went back down again and closed below the upper trend line, at 1.2815. I would vouch for a consolidation in the range of last month’s candle (1.2730-1.3240) with a possible retest and break of the lows (1.2410). Should bulls regain their power, we would be aiming again at the previous retracement level as first target, next one being the retest of resistance area and November 2010 highs around 1.3810/30.

The Euro-Swiss Franc stayed inside the same range as the previous week (1.2740-1.2960/70), this time closing below the upper line and inside the weekly descending channel. Friday gave back all the gains made on Wednesday and Thursday, and price ended below all three moving averages and daily middle line of Bollinger bands. Direction is not very clear and except for mid-March spike down we have been moving inside a wider weekly range (1.2740-1.3240). A break below could be possible if support doesn’t hold, for a further extension to 1.2690 and 1.2590 levels. Should we make another attempt upwards, the first target area would be 1.2960 (confluence of SMA34 and middle line of daily Bollinger bands) and round number 1.3000, then the SMA200 level now at 1.3050.

GBPCHF

May 2011 Overview

The Pound-Swiss Franc stayed in the same range as the previous month, however making a slightly higher low, but closing lower. I would expect a continuation to the downside for further extension towards 1.3500 and 1.3200/1.3180 (lower trend line of the descending channel. Should the actual support area between 1.4300 and 1.4250 hold, the upside targets would be once again the highs at 1.5180, then the upper line of the channel and 38.2% Fibonacci retracement at around 1.5300/1.5340.

Weekly prices went down as we expected, almost reaching March lows and breaking below round number 1.4400, reaching 1.4300 and 138.2% extension on Wednesday. Resistance area has now lowered to round number 1.4700, with the confluence of SMA34 and middle line of daily Bollinger bands. This would be our first target if the actual support zone holds. Next step we will watch is the daily SMA100, presently at 1.4980. On the bearish side, a retest of the lows could be attempted and a continuation to the daily 162.8% extension on previous swing low if 1.4300 is broken.

May 2011 Overview

The Swissie keeps falling and falling. Descending wedge was broken further to the downside, reaching the 127% Fibonacci extension on the previous swing low. The US Dollar doesn’t seem ready to a recovery soon and we could be heading lower to the round number 0.8500 and 138.2% extension at 0.8490. Should we reverse to a bullish scenario anytime soon, the first area to target would be the broken support at 0.8900/30.

Weekly Wolfe Wave still looks possible, though with an over-extended wave 5. Price made another significative leg down this last week, breaking the bottom of the previous descending channel, and reaching the 138.2% and 161.8% Fibonacci extensions on weekly and daily charts respectively. Price evolution has remained inside a 80-pip range since last Friday and despite some isolated surges that can be appreciated on lower time frames, the Swissie keeps looking downward. As said above, we can be targeting 0.8500 or even 0.8400 which is the weekly 161.8% extension on the swing. On the upside, a turn back to the 0.8730/0.8780 could be possible if the US Dollar succeeds at regaining some of its strength.