EUR/CHF Elliott Wave Analysis

EUR/CHF – 1.4675

EUR/CHF: Wave ii from 1.5448 is still unfolding and may extend to 1.4750

Although the single currency slipped briefly to 1.4551 last week, euro quickly rebounded back to 1.4905 on profit-taking, however, the subsequent sideways trading suggests further consolidation would be seen. At the moment, this breach of 1.4577 support calls for a review of our preferred count, whilst we are still treated 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 in progress, the break-down of the E leg is now labeled as a leg - 1.5880, then b leg is unfolding with a leg at 1.4577, the rebound to 1.5448 is wave b, followed by wave c with (a):1.5006, wave (b) at 1.5383 and (c) leg is still in progress which is likely to extend one more fall to 1.4500 but reckon 1.4400 would limit downside.

On the upside, above resistance at 1.4905 would suggest low has possibly been formed but only a daily close above resistance at 1.5000/06 (previous support turned resistance) would confirm and revive our bullishness for stronger rebound towards 1.5140/50. Looking ahead, a sustain breach above there would suggest the (c) leg as well as larger degree wave c has possibly ended and extend gain towards 1.5240/50.

To recap 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.