The Forex Pattern Price Time Report - USD CHF - Evening Session

The USD CHF rallied sharply higher on Friday as traders renewed their confidence in the U.S. economy and financial system.  Traders were willing to invest in higher yielding assets as stability seems to have returned to the markets.  Although this pair closed higher for the week, the main top at 1.1042 is still resistance.   A break back under 1.0865 will be the first sign of weakness.

The strong close on the weekly chart has the market in a position to challenge the February 2008 top at 1.1107.  A break through this price sets up a further rally to a Weekly Down trending Gann Angle at 1.1216.

A pair of down trending Weekly Gann Angles at 1.0974 and 1.0925 will become important if the market begins to weaken.  Right now the close is above these two points.  If the market falls below these two prices, then look for lower markets.  A steep uptrending Weekly Gann Angle also comes in at 1.0970.  This makes 1.0970 to 1.0974 a key area that has to hold.

News that a Korean Bank is “considering” an investment in Lehman Brothers helped rally the Dollar on Friday.  The strong up move erased about half of the Dollar’s loss against a few of the majors, except for the British Pound which made a new low for the year on Friday.

The move to buy Lehman Brothers and the rally in the Dollar clearly identified the main cause of the Dollar’s recent weakness.  Since July 15 the market seems to have absorbed the problems at Fannie Mae and Freddie Mac as a government bailout has been accepted as the final solution.  Traders, however, did not know how to handle the Lehman situation.  Since the Fed has already indicated that Lehman was not a Bear Stearns, and not a takeover candidate, the break in the Dollar this weak was an indication that the market was gearing up for the worst - a failure at Lehman.

The news regarding a possible buyout of Lehman gave the Dollar a little breathing room, but the failure to close all of the Forex markets lower for the week, left open the possibility of another sell-off next week.  The key to next week’s direction is to watch Lehman Brothers, not Fannie Mae or Freddie Mac. In other news, Bernanke hurt the Dollar’s rise a little when he stated that he expected slower inflation and a more stable currency.  This statement led trader’s to believe that the Fed was in no hurry to raise interest rates.


PATTERN

Main Trend:  Up
Main Trend Top:  1.1042 (08-20-08)
Main Trend Bottom:  1.0010 (07-15-08)

PRICE

1.1216        Weekly Gann Angle Down
1.1107        Main Trend Top (02-13-08)
1.1042        Main Trend Top (08-20-08)

1.0985          New York Close

1.0970        Weekly Gann Angle Up
1.0865        .618 Retracement
1.0630        50% Retracement
1.0590        Gann Angle Up
1.0555        Weekly Gann Angle Up
1.0526        50% Retracement
1.0490        Weekly Gann Angle Up
1.0404        .618 Retracement
1.0010        Main Trend Bottom (07-15-08)

TIME

Aug 23          180-Day Cycle