USD/CHF – 0.9505
USD/CHF – Wave IV ended at 1.1730 and wave V has possibly ended at 0.7068
The greenback only recovered to 0.9701 before meeting renewed selling interest and has fallen again, adding credence to our bearish view that the erratic decline from 1.0344 top (formed back in late 2016) is still in progress and downside bias remains for this move to extend weakness to 0.9444 support (2016 low), however, break there is needed to bring further subsequent fall to 0.9390-00, however, loss of downward momentum should prevent sharp fall below 0.9300-10, risk from there has increased for a rebound to take place probably next month.
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 upside, whilst initial recovery to 0.9550-55 is likely, reckon resistance at 0.9622 (yesterday’s high) would cap upside and bring another decline. A daily close above this level would defer and bring a stronger rebound towards said resistance at 0.9701 but break there is needed to signal a temporary low is possibly formed instead, bring retracement of recent decline to resistance levels at 0.9771 and then 0.9808 which is likely to hold from here.
Recommendation: 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.
