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Swiss Franc Ended as Strongest, Aussie as Weakest, But Bitcoin Stole the Show

While Fed minutes started to prepare the markets for discussion on tapering in the coming months, Dollar wasn’t give much support. It has indeed ended as one of the worst performers for the week, just next too New Zealand and Australian Dollar. On the other hand, Swiss Franc and Yen ended as the strongest ones.

While the development in currency markets might suggest risk aversion, it’s not much seen in other markets indeed. Major global stock indexes, US, Europe and Asia, ended nearly flat. Gold edged up mildly while oil price was just slightly lower. The main risk selloff was only seen in some commodities and crypto-currencies

Overall, we’d argue that the strength in Swiss Franc is not solid enough yet while Aussie was not totally weak. Dollar could extend lower for the near term but strong support might be not too far away. Overall, directions are generally unclear.

Bitcoin to draw support from 27k-30k after crash

Crypto currencies were the major focuses in rather dull markets last week. In particular, bitcoin’s crashed to as low as 29563, before settling at 35340. Just a few weeks ago, it hit record high at 64828. While the free fall was much deeper and fast than originally expected, we’d hold on to the view that downside potential is limited in the short term.

Firstly, 161.8% projection of 64828 to 47112 from 59589 at 30924 was already met. Also, upon another fall, it would enter into next key support zone between 28989 and 61.8% retracement of 4000 to 64828 at 27236. This zone should provided the strong support to settle the lower end of the range for subsequent consolidation. Hence, the region between 27k and 30k is indeed seen as a buy zone for us, for a rebound. Nevertheless, there is practically little chance to break through 47112 support turned resistance any time soon.

Swiss Franc not clearly bullish yet despite closing higher

Despite recovering to 1.1026 last week, the subsequent sharp fall in EUR/CHF argues that choppy decline from 1.1149 is ready to resume. But still, it need to take out 1.0915 key cluster support (38.2% retracement 1.0505 to 1.1149 at 1.0903) decisively, as well as the channel support, to show that fall from 1.1149 is more than just a correction. Rebound from there, followed by break of 1.1026 resistance, will retain medium term bullishness for another high above 1.1149.

However, sustained break of 1.0903/15, as well as the channel support, will indicate downside acceleration. More importantly, that would mark the completion of the whole rise from 1.0505, and bring deeper fall to next cluster support zone at 1.0737 support zone (61.8% retracement at 1.0751).