USD/CHF Elliott Wave Analysis

USD/CHF – 1.0738

USD/CHF – The (c) leg of wave b from 1.2298 has possibly ended at 0.9910.

The greenback rallied in line with our expectation and indicated upside target at 1.0700 has been met and price looks set to head towards next upside target at 1.8855 in the wave iii (with i from 0.9910 to 1.0509 and ii at 1.0130), however, reckon 1.0935 would hold on first testing.

Our preferred count is that early selloff to 0.9630 is an end of the larger degree wave (C) and major correction is unfolding from there with a leg of the larger degree wave A ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b is now in progress in the form of an (a)-(b)-(c) with (a): 1.0370, (b): 1.1967, (c) has possibly ended at 0.9910 with wave i: 1.1160 , wave ii: 1.1742, wave iii ended at 1.0033 followed by wave iv at 1.0338 and wave v at 0.9910. This also mark the low of wave b, hence the rise from there is the beginning of wave c with minor wave i ended at 1.0509 and wave ii at 1.0130.

On the upside, a daily close above 1.0935 would provide final confirmation that entire larger degree wave b is over and bring test of next resistance at 1.1026 later.

On the downside, whilst pullback to 1.0640/45 (previous resistance turned support) cannot be ruled out, reckon 1.0509 (another previous resistance) would hold and bring another rally to aforesaid upside targets. Only a break of 1.0480/85 would suggest a temporary top has possibly been formed and risk correction to 1.0390/00 but reckon1.0350 would hold.

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 ended at 1.2298 and b leg is still in progress but downside is likely to be limited to 0.9700 and bring c leg rebound of A in early 2010. In the event dollar drops below0.9700, 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.