EUR/CHF : 1.1327




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EUR/CHF: Major wave 5 trough ended at 0.8426 and correction has commenced from there for subsequent gain towards 1.1400-1.1500.





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Although the single currency extended recent rally to 1.1538 late last week, the subsequent sharp retreat suggests a minor wave iii has ended there, hence 1-2 weeks of consolidation below this level would take place in some form of wave iv, hence mild downside bias is for correction to 1.1250, however, reckon downside would be limited to 1.1185-90 (50% Fibonacci retracement of 1.0833-1.1538) and bring rebound later (tentatively minor b leg of wave iv) back to 1.1400, however, price should falter well below 1.1538 wave iii top, bring another corrective decline in c leg of wave iv later this month. 


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To recap our preferred count, the decline from 1.6828 (end wave (B)) is labeled as the beginning of wave (C) which should unfold as an impulsive move with 1: 1.5326, 2: 1.6377 and wave 3 is sub-divided into (i): 1.4300, (ii): 1.5880 and wave (iii) is still unfolding with (1): 1.4577, (2): 1.5448 and wave (3) is an extended 3rd with i: 1.5006, ii: 1.5383, wave iii: 1.3073, then wave iv ended at 1.3925 and wave v at 1.3073, wave (4) ended at 1.3925 and wave (5) has ended at 1.2765 which also marked the low of wave (iii) and wave (iv) has ended at 1.3835 and wave (v) as well as larger degree wave 3 has ended at 1.0075. The selloff from 1.2650 signals wave 4 has ended there and we are taking a view that the wave 5 could also have ended 0.8426, hence consolidation is seen with mild upside bias for rebound to 1.1000 first (already met), then towards 1.1400.
 


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On the downside, whilst initial corrective fall to 1.1185-90 is likely, reckon downside would be limited and euro should stay well above 1.1100-05 (61.8% Fibonacci retracement of 1.0833-1.1538), bring upmove in wave v later (probably in late Q3). Only a drop below previous resistance at 1.0988 (wave i top) would abort and signal recent upmove has ended, bring correction to 1.0950, then 1.0900 but support at 1.0833 should remain intact. 


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Recommendation: Buy again at 1.1200 for 1.1400 with stop below 1.1100.
The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with A:1.6285 (Dec 1987), B: 1.9342 (May 1992) and C: 1.4166, then wave (B) ended at 1.6828 with A: 1.7147 (Feb 1997), B: 1.4398 (Sep 2001), C: 1.6828 (Nov 2007), therefore, wave (C) is now in progress with the breakdown indicated as above. This wave (C) already met indicated downside target at 1.1455/60 and 1.1300, it could have ended at 0.8426, consolidation with mild upside bias is seen for gain to 1.1000 and later towards 1.2000.
