Thursday, July 31, 2008
July 31, 2008; Swissy Still Ready to Fall
Well the USD/CHF looked poised to fall hard, with continuation, today before it rallied strong with the stock market as the morning progressed. However, it did not selloff like the stock market did at the end of the day. I posted an updated chart of the swissy on the 8 hour time frame. You can see the big bearish divergence with the thick yellow lines where the top yellow line is inclined as price rose, however the two bottom yellow lines on the MACD and stochastics momentum indicators are declining. When price rises, but the momentum indicators decline, that's called a bearish divergence and signals a trend is severely weakening and should reverse sharply. There is bearish divergence on all the smaller time frames as well so any upside potential by this pair should be limited. My profit target is still the 1.0355 level because it's the apex of the prior 4th wave.
I have a proposed current wave count with with a and b waves complete, and wave c should decline strongly to the at least the 1.0355 level. Perhaps the Non-Farm Payroll report tomorrow at 530am PST will trigger that wave c dollar decline. The stock market is definitely ready to fall hard, and looks like it will tomorrow. So a bad NFP number tomorrow looks probable.