USD/CHF Elliott Wave Analysis

USD/CHF – 1.0634

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

Although dollar's retreat suggests further consolidation below recent high of 1.0899 would take place, reckon downside would be limited to 1.0509-15 (previous resistance and 50% Fibonacci retracement of 1.0130 to 1.0899) and 1.0424 (61.8% Fibonacci retracement of 1.0130 to 1.0899) should hold and bring subsequent rally in wave 3 of iii (we are keeping our view the upmove from 0.9910 is an impulsive move with wave i at 1.0509, wave ii at 1.0130 and wave 1 of iii has ended at 1.0899, hence retreat from there is wave 2 of iii.)

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 marks 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, above resistance at 1.0899 would extend gain to 1.0935, however, reckon resistance at 1.1026 would hold on first testing.

On the downside, only a break of 1.0424 would suggest top has been formed and risk correction to 1.0360/70 but reckon1.0300 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.