GBP/CHF – 1.2470
GBP/CHF – Circle wave v ended at 0.9106 and major correction has commenced for subsequent gain to 1.5547.
Sterling continued heading south after last month’s selloff fro1.3069, adding credence to our view that top has been formed there and bearishness remains for this decline to extend weakness to 1.2340-50, then towards support at 1.2285, however, oversold condition should prevent sharp fall below previous chart support at 1.2215, risk from there has increased for a rebound to take place later this month.
To recap the larger degree count, the selloff from 2.4965 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3760, 2: 2.4425, wave 3 extension ended at 1.1470, followed by wave 4 at 1.5547, the quick rebound from 0.9106 suggests wave 5 as well as entire circle wave V could have ended there, hence consolidation with mild upside bias is seen for major correction to take place, bring initial test of 1.5547 (previous 4th of a lesser degree).
On the upside, whilst initial recovery to 1.2535-40 cannot be ruled out, reckon upside would be limited to 1.2595-00 and bring another decline later. Only a daily close above resistance at 1.2690-95 would abort and suggest first leg of decline from 1.3069 has ended, bring a stronger rebound to 1.2740-50, however, as top has been formed at 1.3069, still reckon upside would be limited to 1.2785-90 and price should falter below 1.2850-60, bring another decline later.
Recommendation: Sell at 1.2700 for 1.2500 with stop below 1.2800.
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 4.6175 (Feb 1981), the wave III with circle ended at 1.7425 (Nov 1995) and followed by wave IV with circle at 2.4965 (July 2007 with a short wave C) and wave V with circle has possibly ended at 0.9106. A monthly close above 1.5547 would add credence to this view, bring major correction to 1.7000, then towards psychological level at 2.0000.