GBP/CHF – 1.2978
GBP/CHF – Circle wave v ended at 0.9106 and major correction has commenced for subsequent gain to 1.5547.
As sterling has surged again after brief pullback to 1.2729 late last week and price finally broke above indicated previous resistance at 1.2915, adding credence to our view that another leg of corrective upmove from 1.1475 low is underway, hence further gain to 1.3000, then 1.3045-50 (50% Fibonacci retracement of 1.4614-1.1475) and possibly towards previous chart resistance at 1.3122 would be seen, however, near term overbought condition should limit upside and reckon 1.3190-00 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 1.2940-50 cannot be ruled out, reckon downside would be limited to 1.2890-00 and bring another rise later. Below 1.2800-10 would defer and risk weakness towards said support at 1.2729 but only a drop below this level would signal a temporary top is formed instead, bring correction of recent upmove to 1.2690-95, then towards 1.2600-10 which is likely to contain sterling’s downside.
Recommendation: Buy at 1.2895 for 1.3150 with stop below 1.2795.
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.
