From the Desk of Ian Culley @IanCulley
"The bigger the base, the higher in space."
That’s how I learned it from JC.
But he wasn’t the technician who coined the adage. It was actually handed down from Lousie Yamada, who studied under the legendary Alan Shaw.
It was amazing to connect with technicians from around the world last week at the 50th Annual CMTA Symposium.
I have a great deal of gratitude for all those who made last week possible and to the founding members who paved the way for technical analysis.
The experience was humbling, as it exposed my roots and reminded me where I come from.
It's just like the Swiss franc reminds us that observations from more than a hundred years ago continue to play out across today’s markets…
Check out the monster base in Swiss franc futures:
The Swiss franc is forming a decade-long base, challenging the neckline of a possible inverted head and shoulders. A decisive close above 1.1450 turns my view higher.
Will the Swiss franc run it all the way back to the former all-time highs at approximately 1.4150?
I have no idea. But it’s a possibility I must entertain: "The bigger the base, the higher in space."
When Louise Yamada speaks, you listen!
I’m sure JC agrees…
Meanwhile, it’s difficult to trade breakouts above decade-long resistance levels.
That’s OK. The daily chart provides well-defined levels to trade against and set intermediate-term targets:
Price has found support at a key extension level at approximately 1.12 over the past few weeks, coiling within a potential bull flag.
You can trade against that level or wait for a daily close above 1.1370 to complete the bull flag, targeting 1.1975. Both work for me.
To be clear: The benefit of the doubt lies with the bulls as long as the Swiss franc holds above our risk level.
On the other hand, it’s a hot mess on a close below 1.12.
I want nothing to do with trading the Swiss franc from the long side if it slips below that level.
The US dollar is likely strengthening in that environment, producing stiff headwinds for stocks and commodities.
But, if the Swiss franc begins to catch higher, it could instigate a sustained uptrend that will run into the latter half of the decade.
Is this target too aggressive?
Once again, “The bigger the base, the higher in space.”
That piece of wisdom continues to serve us well, applying to the markets and potentially the Swiss franc in the coming weeks and months.
The titans of the industry have passed down invaluable lessons. It's now up to us to listen and absorb those teaching.
And we, in turn, must share them with all those willing to learn.
Stay tuned!
Thanks for reading.
Let us know what you think. We love hearing from you!
And be sure to download this week’s Currency Report!
You need to have a subscription to access this content in full.
Log in or
subscribe
