USD/CHF – 0.9863
Despite falling to 0.9778 initially this week, as dollar found support there and has rebounded, suggesting consolidation with initial upside bias would be seen and recovery to 0.9900 cannot be ruled out, however, as long as resistance at 0.9947 holds, downside risk remains for the retreat from 1.0039 top to bring retracement of recent rise to support at 0.9737 which is likely to hold on first testing. Only a drop below this level would signal top has been formed instead, bring test of key support at 0.9705 which is likely to hold from here.
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 recovery to 0.9900 cannot be ruled out, reckon upside would be limited and price should falter below said resistance at 0.9947, bring another corrective decline later. Above said resistance at 0.9947 would signal low is formed and suggest the retreat from 1.0039 has ended, bring further gain to 1.0000, then test of said resistance at 1.0039. Only above this level would confirm early upmove from 0.9421low has resumed for headway to previous resistance at 1.0100.
Recommendation: Stand aside for this week.
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.