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Drop in the Swiss Franc no surprise to market technicians

|Includes:CurrencyShares Swiss Franc Trust ETF (FXF)

To market technicians and my daily *Blue Plate Specials* subscribers, the fall in the Swiss Franc--affectionately called the Swissie--came as no surprise. For the two days prior to its initial drop yesterday, the chart of the Swissie's ETF, the FXF, showed large topping tails accompanied by heavier than normal volume and parabolic price action. You can see from its daily chart (shown below) that nearly every time a topping tail appears, the currency corrects.

This time, though, there was not one, but two huge topping tails accompanied by a parabolic price move. This typically indicates that buying pressure is exhausted and that a significant decline is in the cards. Note that the currency may rally again, but stocks showing exhaustion peaks usually do so on weaker volume. If a new rally fails to decisively take out the previous high, you can bet that it is setting up for a major tumble.

Just a word of warning...


Stocks: FXF