GBP/CHF – 1.2760
GBP/CHF – Circle wave v ended at 0.9106 and major correction has commenced for subsequent gain to 1.5547.
Sterling found renewed buying interest at 1.2443 earlier this month and has rallied last week, the breach of indicated previous resistance at 1.2660 adds credence to our bullish view that the rebound from 1.2102 is still in progress and may extend further gain to previous resistance at 1.2915. Once this level is penetrated, this would confirm another leg of corrective upmove from 1.1475 low is underway, then further gain to 1.3000, then 1.3045-50 (50% Fibonacci retracement of 1.4614-1.1475) would follow but reckon previous chart resistance at 1.3122 would hold from here.
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 downside, whilst initial pullback to 1.2690-00 cannot be ruled out, reckon previous resistance at 1.2660 would limit downside and bring another rise later. Below 1.2595-00 (another previous resistance) would defer and risk correction to 1.2552 support but only a daily close below this level would abort and signal top is formed instead, risk further fall to 1.2500 and possibly towards 1.2460-65 but said support at 1.2443 should remain intact.
Recommendation: Buy at 1.2650 for 1.2850 with stop below 1.2550.
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.
