GBP/CHF – 1.3010
As sterling found renewed buying interest at 1.2829 late last week and has rebounded again, retaining our bullishness and consolidation with mild upside bias remains for the rebound from 1.2746 low to extend gain to 1.3050-60, however, reckon upside would be limited to 1.3105-10 and price should falter well below said resistance at 1.3197, bring retreat later. In the event sterling is able to penetrate said resistance at 1.3195, this would indicate early erratic rise from 1.1475 has resumed for further gain to 1.3250, then towards 1.3300-10 but overbought condition should prevent sharp move beyond 1.3400 and reckon 1.3526 (previous support) would remain intact.
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 downside, expect pullback to be limited to 1.2930-40 and said support at 1.2829 should remain intact, bring another rebound later. A drop below this level would suggest the rebound from 1.2746 has ended instead, bring retest of this level later. A break below 1.2746 support would signal the fall from 1.3197 top is still in progress for retracement of recent rise to support at 1.2716, a daily close below this level would suggest a temporary top has been formed, bring correction to 1.2650-60 and later towards 1.2600.
Recommendation: Hold long entered at 1.2800 for 1.3050 with stop below 1.2825.
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.
