USD/CHF – 0.9888
Although the greenback retreated after meeting resistance at 0.9978, as the strong rebound from 0.9735 signals correction from 1.0039 has ended there, reckon downside would be limited to 0.9800-10 and bring another rise later, above said resistance at 0.9978 would add credence to this view, bring further gain to 1.0000, break there would confirm upmove has resumed for retest of 1.0039. 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, expect pullback to be limited to 0.9830-35 and 0.9800 should hold, bring another rise later. Only below said support at 0.9735 would abort and signal the corrective fall from 1.0039 top is still in progress and may extend weakness to 0.9705 support, then towards 0.9640-45 but reckon previous support at 0.9589 would hold from here, bring rebound later.
Recommendation: Hold long entered 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.