Currency Market - Swiss Franc Highlight #1
Exact day of 4 month low in Swiss Franc identified through the use
of weekly "Inversion Cycle", chart pattern, and Elliott Wave formation
ALIGNMENT - sharp rally ensues.
(COMMENT # 43)
UPDATED 19980120
COMMENT 1998-43
1. One other market that appears to be bottoming is shown on page 341 of "The 1997 $upertrader's Book of Linear Time Cycles".
2. Note the weekly "Inversion Index" also listed on page 249 (see the "WIC" listing which the box in the "Cycle Lineups" section defines as "W" = weekly and "IC" = Inversion Cycle so that "WIC" = Weekly Inversion Cycle).
3. This market is forming a potential "reverse head and shoulders" bottom with the left shoulder low on 970306 and the low of the head on 970805.
4. The left shoulder low was 6705. If the bottom of the right shoulder occurs today, the bottom of the right shoulder would occur at 6706.
5. Intervening highs occurred on 970520 and 971107.
6. The price of the intervening highs was 7260 and 7258.
7. It is possible to "count" the advance from the "head" low to the 971107 high as a "5 wave Elliott Wave" "first wave" or "A wave" up.
8. Price has had a rather violent change in trend in this market every 39 months over the last 20 years. This is the 39th month in this series.
9. This market is attempting to hold a .382 sloppy retracement level of the 10 year advance from 1985 to 1995. The movement looks similar to that shown in the middle chart on page 281 of "The 1998 $upertrader's Almanac - 1st Half Edition".
10. The "A" and "C" waves of the assumed "A-B-C" correction have each lasted 32 calendar days (Ratio = 1:1).
11. The "A" wave lasted 416 ticks in the March contract, 399 in the "C" wave.
12. The market is thus trading right at the bottom of the channel formed by drawing a down trendline off the November and December highs and the parallel line of the bottom of the channel off the December low.
13. Traders should be particularly sensitive to market reversals to the upside in this market and should employ approaches that provide long entry with tight stops against recent lows in the April contract.
14. The very short term trading system presented on pages 96-101 of "The $upertrader's Almanac - Reference Manual" is such a "system" and can be used on either daily or intra-day charts.
15. A close above the open over the next few days will cause a "black" candlestick which should be sufficient to provide a short term entry signal.
16. The system presented in pages 205-209 of "The $upertrader's Almanac - Reference Manual" is particularly suitable for this market at this time as is the "ALMANAC II" trading system presented in "The 1996 $upertrader's Almanac - 2nd Half Edition). Note that the same pattern applies to the hourly chart which reduces risk and provides for tighter stops.
17. The reader should observe that trading is simply the process of identifying a number of situations such as this one that have a chance of working out quite well if the analysis is correct but which involve very little risk to capital if wrong.
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