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TECHNICAL ANALYSIS

Currency Trends To Watch

Currency Trends, Watch, Technical Analysis, CAD, CHF, NOK, NZD, fx trader, forex Trends to watch 2016

29 Jan 2016

The start of the year is not only a time for reflection but also an opportunity to take a look at the longer-term trends.  One of the big differences between the Foreign Exchange Markets and other asset classes is that it involves trading (a ratio of) one currency against another, rather than a currency in its own right.  Quite closely related currency pairs can look quite different to each other and it can sometimes be difficult to  get an  overall view of any particular  currency.

This analysis and outlook for 2016 will help clarify the underlying trend for some of the main currencies and give a clearer picture of the underlying trend than is possible looking at individual currency pairs.  The currency indices presented here give equal weight to all components used and are therefore different to trade-weighted charts.  They are particularly useful for portfolio managers who are looking to switch between the major economies with little interest in those smaller economies which may make up some of the trade-weighted indices.  

Swiss Franc long-term

Currency Trends, Watch, Technical Analysis, CAD, CHF, NOK, NZD, fx trader, foCurrency Trends, Watch, Technical Analysis, CAD, CHF, NOK, NZD, fx trader, forex CHF basket FXTrader

The Swiss Franc has been contained within a bullish channel for many years and the acceleration higher seen in January 2015 was in line with that trend. The correction lower seen for much of 2015 has partially unwound an overbought condition and the unwinding of gains may continue during the first  part of  2016.  However, the overall  structure of the chart remains positive  and an eventual resumption of the overall uptrend is favoured to new highs.

Canadian Dollar long-term

Currency Trends, Watch, Technical Analysis, CAD, CHF, NOK, NZD, fx trader, forex CAD basket FXTrader

The Canadian Dollar is looking very weak technically.  For many years setbacks were supported by the (blue) 120 month (10 year) moving average, but the breakdown in late 2013 accompanied by a dead-cross of the 12 & 60 month (1 & 5 year) moving averages triggered a move towards the 1995-200 uptrend line.  This initially provided support in early 2014, but since then the 120 month (10 year) moving average has reverted to resistance, triggering the start of the latest decline which is now through the 2014 low and the aforementioned 1995-2002 uptrend line.  The 1, 5 & 10 year moving averages are bearishly aligned, MACD has turned down from a lower  top  and the risk is for continued  weakness  through  2016.

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