Swiss Franc and Gold Set to Rally After S&P Downgraded

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Standard and Poor’s downgraded the U.S.’s sovereign credit rating from AAA to AA+ on Friday after the market close. There are a lot of speculations how the markets will react, which should be US dollar negative. Now, the question is where the money will go!? We believe it will be nothing different compared to what we saw in the past week. Swiss franc and gold should rally as safe-haven investments! The Japanese yen will also not be an exception, but gains on that one may quickly slow down because of possible intervention speculations.

Some one would also have think on commodity currencies, such as Australian, New Zealand and Canadian dollar, but because of very tight correlations to commodity and stock markets that are falling; so we don’t think that those currencies will be a good choice however! Technicals are also showing negative trend on those, so its better to avoid them at this point.

Guest post by Gregor Horvat

G-7 will meet up today through the conference call, and will discuss about Europe’s sovereign-debt crisis and a cut in the US credit rating. But what they will really try to do here is to calm down the markets and move investors away from a potential “fear factor”, which will not last long however.

Below is a technical chart of Usd/Chf where we are monitoring a third wave of decline from 0.853. Remember, third wave i s usually the strongest and longest wave in an impulsive sequence, so wave 3 bottom could be much lower.

USD/CHF Daily chart

USD CHF Elliott Wave Analysis August 8 2011

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About Author

Grega Horvat Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of Ew-Forecast, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At Ew-forecast he helps clients and educates them about the Elliott wave principle and how to label and track unfolding patterns in real time. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty, however, is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators. EW-Forecast To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power!

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