USD/CHF – 0.9673
USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068
The greenback did meet renewed selling interest at 0.9808 late last month and has fallen again (we recommended in our previous update to sell at 0.9800 and a short position was entered there), adding credence to our bearish view that the decline from 1.0344 top is still in progress, hence downside bias remains for this move to extend further weakness to 0.9600, however, near term oversold condition should prevent sharp fall below previous chart support at 0.9550 (Nov 2016 low) and price should stay well above another chart point at 0.944 (2016 low), risk from there is seen for a rebound to take place later.
Our preferred count on the daily chart is that early selloff to 0.9630 is an end of the larger degree wave III and major correction is unfolding from there with a leg ended at 1.2298 (Nov 2008 with (a): 1.0625, (b):1.0011 and (c):1.2298), wave b ended at 0.9910 with (a): 1.0370, (b): 1.1967, (c): 0.9910. The rise from there to 1.1730 is the wave c which also marked the end of wave IV and wave V has possibly ended at 0.7068.
On the upside, whilst initial recovery to 0.9720 cannot be ruled out, said resistance at 0.9808 should remain intact and bring another decline later. A daily close above this level would defer and suggest a temporary low is possibly formed instead, risk rebound to previous support at 0.9859m break there would add credence to this view, bring retracement of recent decline to 0.9900 but price should falter below 0.9955-60.
Recommendation: Hold short entered at 0.9800 for 0.9600 with stop above 0.9830
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) with wave III ended at 0.9630 (Mar 2008). Under this count, correction in wave IV has possibly ended at 1.1730 and wave V already broke below support at 0.9630 and met indicated downside target at 0.7500 and 0.7400. The reversal from 0.7068 suggests the wave V has possibly ended and the breach of resistance at 0.9595 add credence to this view and indicated upside target at 1.0000 had been met, however, the sharp retreat from 1.0296 to 0.7401 suggests choppy trading would be seen but price should stay above said record low at 0.7068.