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USD/CHF Elliott Wave Analysis

USD/CHF –  0.9999

USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068

Although the greenback did meet renewed selling interest at 1.0003 (we recommended in our previous update to sell at 1.0000) and dropped to as low as 0.9815 (just missed our downside target at 0.9800), as decent demand emerged there and dollar has staged a strong rebound, suggesting low has possibly been formed and consolidation with mild upside bias is seen for another test of 1.0003, however, a daily close above previous support at 1.0060 is needed to add credence to this view, bring further fain to 1.0105-10. Having said that, price should falter below resistance at 1.0171, bring retreat later. In the unlikely event dollar breaks above said resistance at 1.0171, this would revive our bullish view for the erratic rise from 0.9861 to extend further gain to 1.0200 and possibly test of resistance at 1.0248, however, a daily close above there is needed to signal the retreat from 1.0344 has ended at 0.9861, bring eventual retest of 1.0344.

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 0.9945-50 cannot be ruled out, reckon downside would be limited to 0.9910-15 and bring another rise later. Below 0.9900 would suggest the rebound from 09815 has ended instead bring another fall towards said support at 0.9815. Looking ahead, only a break below this level would confirm another leg of major fall from 1.0344 top is underway for further fall to 0.9735-40, however, oversold condition should prevent sharp fall below 0.9675-80 and price should stay well above 0.9600, bring rebound later.
Recommendation: Exit short entered at 1.0000 and 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.

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