USD/CHF – 0.9600
Although the greenback resumed recent decline as the pair dropped below previous support at 0.9438 earlier this week, lack of follow through selling and the subsequent strong rebound from 0.9428 suggest consolidation above this level would be seen and gain to resistance at 0.9698-99 cannot be ruled out, however, break of resistance at 0.9773 is needed to signal a temporary low has been formed at 0.9428, bring retracement of recent decline to resistance at 0.9808 later which is likely to hold on first testing.
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 initial pullback to 0.9570-75 cannot be ruled out, reckon downside would be limited to support at 0.9539 and bring another rebound later. Below 0.9490-00 would dampen this near term bullish view and suggest the rebound from 0.9428 has ended, bring another test of this level later. A drop below this level would signal medium term erratic decline from 1.0344 top (formed back in late 2016) is still in progress for further weakness to 0.9350-60, however, loss of downward momentum should prevent sharp fall below 0.9300-10 and 0.9200-10 should hold, risk from there has increased for a rebound to take place later.
Recommendation: Buy at 0.9540 for 0.9740 with stop below 0.9440
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.