By: Mike Kulej
The US Dollar-Swiss Franc has reached yet another milestone in its downtrend, which seems like never ending. On Wednesday, the USD-CHF made a new all time low at 0.8918. For the first time ever the psychologically important 0.9000 level has been breached.
There is no doubt about the trend direction, but how much lower can the price get? That is always very tricky at new price extremes, since no clues are offered by previous supports/resistances. One of the possible exhaustion points are round numbers, the “handles”, but they can only be used in very broad terms.
What's Next?
Instead of predicting the end of the trend, it is probably better to wait for the market to indicate that. Right now the downtrend is accelerating, which cannot last very long. The inside trendline is becoming steep and should be watched carefully – if broken that could be a start of the reversal. Another good indicator in this type of situations is the Parabolic Stop and Reverse, which also might signal when the trend is over.
For now, the USD-CHF is in a strong down trend. Even though it would be tempting to forecast a bottom soon, one has to remember that trends can last longer and go farther than an account can withstand. One should be patient and wait for the market to “tip its hand”.