Bottom line: USDCHF short to medium term counter trend rally might have resumed after printing lows at 0.9613 on January 16, 2020.
Technical Analysis:
USDCHF bears might have terminated a lower degree Wave 1 of (3) at 0.9613 levels yesterday. Probability remains for a counter trend rally towards 0.9850 at least, before it resumes lower again. We have adjusted the degree of waves since 1.0023 highs to comply with Wave (3) of the larger degree. Please note that the drop from 1.0027 through 0.9613 can be counted in 5 waves labelled I through v here. This could be Wave 1 within Wave (3), terminating close to 0.9600 yesterday. If the above counts are correct, we should witness a 3 wave corrective rally that pushes USDCHF towards 0.9850 at least. A break above 0.9762, which is immediate price resistance, would confirm the above. An aggressive trading opportunity can be seen towards 0.9850 with protective stops just below 0.9613 levels. A more conservative approach would be to remain flat for now and allow prices to break 0.9762; then consider longs on corrective drops. Please note that the above would be wave a within the a-b-c corrective rally discussed earlier. The fibonacci 0.618 retracement of drop between 1.0025 and 0.9613 is seen at 0.9868. It would be normal for the counter trend rally to push through 0.9868 before producing a bearish reversal. Looking at the overall wave structure since 1.0237 highs, USDCHF had produced an impulse Wave (1) towards 0.9655. This was followed by a 3 wave corrective rally towards 1.0027, labelled as Wave (2) of similar degree. Since then Wave (3) has been unfolding, and might have completed Wave 1 at 0.9613 yesterday. If the above counts are correct, expect a counter trend rally to unfold as Wave 2, before Wave 3 of (3) resumes lower.
Prepared by
Harsh Japee, Technical Analyst.
USDCHF Chart
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