CLASSIC TECHNIQUES
Using Paper And Pencil (Hey, It Still Works!)
Long-Term Trading With Swiss Francs
by Andre Zupans
Didn't you love that little cotton trade we showed you back in May 2000? Want to try again with Swiss francs? Here's your chance.
In the May 2000 STOCKS & COMMODITIES, I presented a long-term commodity trading technique. At that time, cotton offered a great long-term trading setup. A weekly point & figure close of 5500 in January 2000 had issued a buy signal. The 5500 calls six months out were bought at about 3.00, or $1,500 per call. In March, cotton reached about 6300, sending the calls to around 9.00, or $4,500 per call (Figure 1). Note the 5500 breakout. A sharp move to over the 6300 level produced a winning trade. My conclusion was that a long-lasting bull move in cotton was likely.
FIGURE 1: COTTON. Cotton breaks from its base, providing a nice opportunity to profit in calls.
Likewise, the Swiss franc offers great long-term profit potential. Set
up this market for your own trading using the same long-term trading technique;
no computer is needed, although, of course, no guarantee of profitability
can be made. All you need are:
1 Monthly Swiss franc P&F
2 Yearly Swiss franc seasonal pattern
3 Weekly Swiss franc P&F
4 Swiss franc trade setup.
MONTHLY SWISS FRANC P&F
First, examine the long-term trend in the Swiss franc. As Figure 2 shows, the Swiss franc has been in a major downtrend. It's probably ready for at least a countertrend rally, retracing 50% of this major decline. Note the major support at 5800. Is the Swiss franc making a major low? I think it is.
The downtrend from 8900 to 5800 has had four of the congestions I seek
(see my May 2000 article, on cotton). A five-wave Elliott wave pattern
is also evident (waves 1 through 5). A solid bottom with at least a 50%
retracement is possible, which would propel the Swiss franc to about 7400.
Such a retracement offers great long-term profit potential.
...Continued in the March 2001 issue of Technical
Analysis of STOCKS & COMMODITIES
The author submitted this article in August 2000. -- Editor
Andre E. Zupans is president of BreakoutIntelligence.com. He can be reached at 719 687-7347 or Lzupans@msn.com.
Excerpted from an article originally published in the March 2001 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2001, Technical Analysis, Inc.
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