Bottom line: USDCHF bearish structure intact after bears took control from 1.0023 levels earlier. Intraday pullbacks are possible though.
Technical Analysis:
USDCHF bears remain in control for now, as 3rd of (3) rd wave is underway since 1.0023 highs print on November 29, 2019. It is seen to be approaching near term support close to 0.9750/60 levels and intraday/interday pullbacks are possible before resuming lower towards 0.9696 at least. Looking at the medium to long term structure, USDCHF had dropped in 5 waves between 1.0237 and 0.9659 levels earlier, marked as an impulse Wave (1). This was followed by a corrective (3 wave) rally A-B-C towards 1.0027 levels respectively. Wave C, within the correction was an ending diagonal pattern, indicating reversal from 1.0027; the Wave (2) termination. Ideally, a classic 5-3 Elliott Wave pattern is followed by another 5 waves of the same degree, towards the major direction which is down in this case. As we have been discussing since last several weeks, Wave (3) is finally seen to be materializing from 1.0027 levels. Lower degree Waves 1 and 2 are in place at 0.9840 and 1.0023 levels respectively and Wave 3 seems to be underway towards 0.9696, which is 1.618 extension of Wave 1. Short term support is seen around 0.9750/60 levels and we can expect a pullback rally, which should remain well capped below 0.9916/20 levels. Having said that, those should be considered as opportunities to build further short positions against 0.9920 or 1.0023 (depending on risk appetite), with potential targets at 0.9696 at least. Also note that Wave (3) termination would be seen much below 0.9650 levels, going forward. Only a break above 0.9916/20 and subsequently above 1.0023 levels would change the existing bearish structure. For now, look bearish towards 0.9696 while expecting intraday counter trend rallies.
Prepared by
Harsh Japee, Technical Analyst
USDCHF Chart
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