USD/CHF – 0.9908
Although the greenback extended recent fall from 1.0039 to as low as 0.9735 late last week, as dollar found decent demand there and has staged a strong rebound, suggesting low has been formed there and consolidation with upside bias is seen for gain to 0.9947 resistance, however, a daily close above 0.9987 is needed to add credence to this view and signal entire correction from 1.0039 has ended at 0.9735, then retest of this level would follow. Looking ahead, a break of 1.0039 would confirm early upmove from 0.9421 low has resumed and extend headway to previous resistance at 1.0100.
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 downside, whilst pullback to 0.9840-50 cannot be ruled out, downside would be limited and support at 0.9794 should contain weakness, bring another rise later. Only a drop below said support at 0.9735 would abort and signal the erratic decline from 1.0039 top is still in progress for retracement of early upmove to 0.9705 support, then towards 0.9640-45 but reckon previous support at 0.9589 would hold from here, bring rebound later.
Recommendation: Buy at 0.9850 for 1.0050 with stop below 0.9750.
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.