I have warned lately (Click Here) that the US Dollar was forming a huge bottom vs the Swiss Franc which should produce a powerful counter trend rally of the magnitude of the one that occured in the USD vs the Canadian Dollar in late 2007.
It seems that the first chapter of the counter trend is in full effect. Check out how the US Dollar shorts are running for cover courtesy of the Swiss central bank !
As i was going thru the chart of the USD dollar vs the Swiss franc , it really seems that we experienced some sort of capitulation lately (that I highlighted in red). It reminded me of the capitulation in the USD vs the Canadian Dollar back in late 2007. What happened afterwards was a multi week consolidation and a massive counter trend rally retracing 50% of the whole move down.
What I think will happen in the USD vs the Swiss franc is a similar counter trend move of this magnitude.
There are two main change in trends that are taking place.
First a major top in Gold.
Second a major top of the Swiss franc vs the US dollar.
Yesterday,I had someone busting in the trading room at my office telling me how cool it was buying the dips on the Swiss Currency vs the USD dollar. aka FXF.
The person basically told me : "Look Serge it's so easy making money these days in the forex markets. All you have to do is buy the dips on the Swiss franc (FXF)"
I took a look at the chart that I'm not very familiar with. It's true that this has been a one way market for about more than a year... but looking at the chart since the year 2000 I'd say that some folks are going to be very dissapointed with the Swiss Franc vs the USD if they don't sell their positions. Here's why :
