GBP/CHF – 1.5579

GBP/CHF – Wave 4 correction from 1.5122 has ended at 1.8114.

The British pound finally broke below indicated support at 1.5828-35, adding credence to our view that wave ii has ended at 1.7076 and bearishness remains for wave iii of 5 to extend further weakness, initial projected target at 1.5660/65 (61.8% projection of 1.8114 to 1.5828 measuring from 1.7076) has been met and decline to 1.5400 and possibly 1.5220/25 (1.236 times projection of 1.7076 to 1.5832 measuring from 1.6759) would be seen.

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). Our preferred count remains that wave 4 from 1.5122 has ended at 1.8114 with a: 1.7486, b: 1.5849 and wave c at 1.8114.

Under this count the decline from 1.8114 is the wave i of 5 and our latest preferred count treated this wave i ended at 1.5828, followed by wave ii at 1.7076 and wave iii is under way for further fall to aforesaid downside target but reckon wave 3 low at 1.5122 would hold on first testing.

In view of this, we are still looking to sell on recovery as previous support at 1.5828-35 should limit upside. Only above 1.6065-70 would defer and risk correction to 1.6190/00 but price should falter below 1.6350/60 and bring another selloff later.

Recommendation: Sell at 1.5820/30 for 1.5450 with stop above 1.6000.

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.