GBP/CHF Elliott Wave Analysis

GBP/CHF - 1.7817

GBP/CHF - Wave 4 correction from 1.5122 has possibly ended.

Although the British pound rose to 1.8091 last week, as price has retreated after faltering below previous resistance at 1.8114, suggesting further consolidation below there would take place and it is quite possible that we have a failure 5th formed at 1.8091 and downside bias is seen for correction to 1.7600, then towards 1.7448 . However, we need to see a daily close below support at 1.7391 to confirm this count and signal the wave c as well as entire wave 4 has ended at 1.5122, bring further fall to 1.7000.

To recap the larger degree count, the selloff from 2.4967 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3763, 2: 2.4429, wave 3 extension ended at 1.5122 (sub-divided into i: 2.3490, ii: 2.4209, iii: 1.9605, wave iv: 2.0359 and wave v: 1.5122). Wave 4 from 1.5122 is unfolding with a: 1.7486, b: 1.5849 and wave c has possibly ended at 1.8091 with a failure 5th.

On the downside, a daily close below 1.6982 (50% Fibonacci retracement of 1.5849 to 1.8114) would add credence to this bearish count, then test of strong support at 1.6624-1.6651 would follow, once this level is broken, this would confirm the wave 4 correction is over, then wave 5 would bring further fall to 1.6200 and 1.6000.

In the event sterling rises above 1.8091, this would signal the final leg of wave c is taking place and gain towards 1.8213 (100% projection of a-leg measuring from b-leg trough at 1.5849) would follow but upside would be limited to 1.8677 (38.2% retracement of the entire wave 3 from 2.4429) and 1.8771 (1.236 times projection of a-leg) would hold and bring the wave 5 decline in late Q3.

On the Monthly chart, the longer-term count is that major downtrend is under way with circle wave I at 2.8645 (Sep 1.978), then wave II with circle at 4.6178 (Feb 1981), the wave III with circle ended at 1.7424 (Nov 1995) and followed by wave IV with circle at 2.4967 (July 2007 with a short wave C) and wave V with circle is taking place. Although sterling has rebounded from 1.5122, expect resistance 1.9378 (previous support turned resistance) to cap upside and bring the final leg of wave V for retest of 1.5122, then psychological support at 1.5000.