Bottom line:  USDCHF remains bearish until prices stay below 1.0023 levels going forward. The recent rally could be seen into its last wave and is expected to find resistance around 0.9800/10.

Technical Analysis:

USDCHF bears are looking poised to return from near levels as a potential wave iv is being carved out since 0.9613 lows on January 16, 2020. The short term wave structure is indicating that an a-b-c corrective rally (flat) is being carved out as a lower degree wave iv. It is expected to terminate around 0.9800/10 levels before wave v resumes lower again. If the above counts are correct, prices should stay below 0.9850/60 (wave I lows) and continue pushing lower below 0.9613 respectively. The minimum projected target for wave v to terminate is towards 0.9510 levels. This drop to 0.9510 would complete Wave 1 within the 5 waves drop expected from 1.0027 levels. Alternately, if USDCHF rally pushes beyond 0.9850/60 levels, it would indicate that Wave 1 already terminated at 0.9613 earlier and a corrective Wave 2 is underway. In either case, we should expect a drop from either 0.9810/15 or 0.9850/60 levels respectively. A reversal from here (0.9797) levels would confirm that a flat wave iv is complete and USDCHF bears are now targeting below 0.9510. Most traders might be looking to initiate short positions around current level with protective stops above 0.9850 and projected targets below 0.9510 respectively. Looking at the overall wave structure, the USDCHF has produced 5 waves down, followed by 3 waves up. The drop between 1.0237 and 0.9659 was in 5 waves, labelled as Wave (1). The subsequent rally was corrective A-B-C that terminated at 1.0027, labelled as Wave (2). Since then, Wave (3) could be in progress and lower degree waves I, ii, iii and iv seems to be in place at 0.9840, 1.0023, 0.9613 and around 0.9800 respectively. If the above counts are correct, wave v should terminate around 0.9510 going forward.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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