EUR/CHF Elliott Wave Analysis

EUR/CHF – 1.5205

EUR/CHF: wave c rally commenced at 1.4577 should retest 1.5448

We have changed our preferred count as indicated on the attached daily chart, the decline from 1.6828 (10 Nov 2007) to 1.4300 is treated as D leg of a larger degree wave (B) and E leg of this triangle wave (B) is now in progress with a leg ended at 1.5880, then b leg at 1.4577, the 5-waver c is taking place with wave i ended at 1.5448, prolonged wave ii has ended at 1.5006. Under this count, the wave iii has commenced and once price is able to break through resistance at 1.5448 (better to have a daily close above there), this would confirm this view and rally to 1.5600, then towards 1.5880 resistance, which is also just above the 100% projection of wave i from 1.4577 measured from wave ii bottom at 1.5006 at 1.5877.

In the event the currency pair drops below support at 1.5000/06 again this would suggest the wave ii is still unfolding, then fall to 1.4909 (61.8% Fibonacci retracement of 1.4577 to 1.5448) cannot be ruled out but downside would be limited to 1.4800 and as long as support at 1.4577 holds, we would stick to this near term bullish count.

To re-cap the selloff from 1.6828 (10 Nov 2007), the decline from there is now labeled as a-b-c 3 legged move with a: 1.5326, b: 1.6370 (July 2008) and then c leg as well as the wave D ended at 1.4300 (Oct 2008), followed by this E leg which is still in progress and break of 1.5880 resistance would bring the c leg of E to 1.6157 (100% of a leg from b) and later towards 1.6370, however, upside would be limited to 1.6500 and price should stay well below resistance at 1.6828 (wave C top).

The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with A:1.6285 (Dec 1987), B: 1.9342 (May 1992) and C: 1.4166, then wave (B) is unfolding with A: 1.7147 (Feb 1997), B: 1.4398 (Sep 2001), C: 1.6828 (Nov 2007) and despite the brief break below B leg trough to 1.4300, the strong rebound from there suggests price is still consolidating with medium term broad trading band, hence we are treating this fall as the D leg of a large triangle wave (B) from 1.4166. So resistance at 1.6828 should continue to cap upside and bring another selloff later. Once price drops below 1.4300 support, this would confirm the wave (B) has ended and downtrend would resume for retest of 1.4166, then 1.4000.