GBP/CHF – 1.2390

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GBP/CHF – Circle wave v ended at 0.9106 and major correction has commenced for subsequent gain to 1.5547.

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Although sterling recovered after finding support at 1.2215 earlier this month and consolidation above this level would be seen, reckon upside would be limited to 1.2445-50 and bring another decline, below 1.2295-00 would suggest the rebound from 1.2215 has ended and bring retest of this level later. A break of 1.2215 would signal the erratic fall from 1.2915 has resumed and extend weakness to previous support at 1.2102 which is likely to hold on first testing. Looking ahead, only a break below this level would extend the fall from 1.2915 to 1.2000-10 and later towards previous support at 1.1962 but reckon key support at 1.1899 would contain downside.


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 upside, whilst marginal gain from here cannot be ruled out, reckon upside would be limited to 1.2450-60 and bring another decline later. Above 1.2500-05 would abort and signal low is formed instead, risk a stronger rebound to 1.2570-75 but break of said resistance at 1.2660 is needed to shift risk back to the upside for the rebound from 1.2102 to extend further gain to 1.2745-55, above there would signal the retreat from 1.2915 has ended at 1.2102 and encourage for subsequent gain to 1.2800-10 first.
 

Recommendation: Hold short entered at 1.2410 for 1.2210 with stop above 1.2510.
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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.
