USD/CHF Elliott Wave Analysis

USD/CHF – 1.0865

USD/CHF will continue to gyrate above support at 1.0592

We have revised our preferred wave count on USD/CHF and as indicated on the attached daily chart, early selloff to 0.9630 is now treated as an end of the larger degree wave (C) and major correction is unfolding from there with a leg of a larger degree wave A ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), then wave b is now in progress which is likely to developing into a triangle with the breakdown as follow: (a): 1.0370, (b): 1.1967, (c) has either ended at 1.0592 (our preferred scenario) or may extend marginally towards 1.0450 but the support at 1.0370 (the (a)-leg trough) should remain intact.

A daily close above resistance at 1.1026 would be the first sign that the (c) leg has ended at 1.0592 and rise to 1.1167 (50% Fibonacci retracement of 1.1742 to 1.0592) would follow, however, it is necessary to see a break of 1.1263-1.1303 (chart resistance and 61.8%) to confirm the (d) leg is underway towards eventual upside target at 1.1442 (61.8% Fibonacci retracement of entire (b) leg from 1.1967).

In the event price drops below the support at 1.0370, this would abort our triangle scenario and then the (c) leg of larger degree wave b would extend to 1.0200, however, we still expect 1.0011-1.0039 (previous support and 100% projection of (a) leg from (b)) to contain this wave (c), then a strong rebound in larger degree wave c shall take place thereafter.

Dollar's long-term downtrend started from 2.9343 (Feb 1995) and it was unfolding as a (A)-(B)-(C) with (A): 1.1100, (B): 1.8310 (26 Oct 2000), then followed by another impulsive wave (C) which ended at 0.9630 (Mar 2008). Under this count, a major correction is now in progress with a leg of larger degree A just ended at 1.2298. If price drops below1.0000, this would suggest only wave III (our alternate count) has ended at 0.9630, then the final wave V of (C) would extend weakness to 0.9500.