Nestled in the heart of Europe, the Swiss are known for their excellence in chocolates and cheeses but more notably their innovative ability in the fields of manufacturing and pharmaceuticals that play a vital role in ensuring a healthy trade balance that's the envy of other nations. The country has however suffered from protracted periods of appreciation in the Swiss Franc, it's local currency with the severity of sentiment having been tested in January 2015 when the Swiss National Bank president Thomas Jordan announced a surprise decision to remove a floor that had been placed on the Franc against the Euro stopping it from appreciating further.
Besides this event, the nation has also found itself in the grasps of a battle to produce meaningful inflation following the lack of demand both locally and internationally which has eventually led the SNB to drop interest rates below zero (one of the first nations to do so) with imminent signs of continuing on this path as the latest economic data indicates the country is far from where it would like to be.
The SIX Swiss Exchange in Zurich plays host to some recognisable multinational companies some of which are;
- Glencore
- Compagnie Financiere Richemont SA
- Credit Suisse Group
- Nestle SA
- UBS Group
- Swatch Group SA
- Novartis AG
- Zurich Insurance Group
Let's get to the charts:
Quarterly
An appealing chart at quick glance considering the volatile price moves that have been experience over the past decade. Although it must be noted that the timeframe is a quarterly, there remains distinct technical features that provide us with clues to what we can expect to see happen in the future.
The index shot up to 9 500 during the year of 2007 followed by the slump most world markets went through occurring between 2008 and 2009. I've touched on this extensively saying that the similarity of technical damage incurred by market indices from the same event does stress the significance of its doing. The previous highs leading up to the bubble bursting played a pivotal role in dictating the direction of world stocks by providing overhead resistance that's stopped most indices from marching ahead and at the same time denting confidence when considering investment into equities.
I made the resistance line of 9 500 bold because it marked an important level traders and investors needed to pass in order to be satisfied that the current bull run that's been in place since 2012 will remain intact and energetic enough to settle the index at higher levels. This hasn't materialised with the resultant action being the retest of the line of polarity highlighted in red.
Again, I saw this as a crucial point in the bull run where it represented a step higher in its pursuit to the resistance level and higher. The level of 7 500 was broken during 2008 but overcome five years later with the bulls setting themselves up for a good run. However observing the price action you'll notice the tails to the bottom were small then began expanding as the price got closer to 9 500. This would indicate heightened volatility at elevated levels spelling uncertainty.
The area of interest will take place at 7 500, so don't be surprised if this level is well contested in the second half of the year. Depending on the sentiment world markets take on, it could prove either distressful or supportive of price going forward.
Monthly
I've introduced a 50 SMA to clarify the bias price currently holds with the observation being critical in the tipping point of this chart. Price sits below the moving average having broken down in recent months. The moving average does however exhibit a positive gradient making things hard for traders to decipher the direction.
Although the technical formation isn't perfectly aligned, the basis of the shape does help us understand what price action may be suggesting. The flat floor together with an upward slope along the highs building up to 9 500 confirms the volatile nature the quarterly chart had indicated, telling us that the level of uncertainty in this area remains high.
The support between 8 200-8 300 has broken downward with price desperately trying to hold onto newly formed resistance. The RSI has generated a favourable indication for the bears by showing the momentum shifting below the 50 level after last being there in 2012. This suggests that the momentum from the sellers is much stronger than it had been while they were fighting for territory in the area between 8 200-9 500.
The setup seems perfectly positioned for the trade with good risk to reward ratios.
No comments :
Post a Comment