Bottom line:  USDCHF bearish structure continues to remain intact but expect counter trend rallies to push through 0.9770/0.9870 levels before the drop continues.

Technical Analysis:

USDCHF bears continue to remain in control as potential Wave 1 of (3) might have terminated close to 0.9600/10 levels on January 16, 2020. It is fair to expect a counter trend rally in 3 waves a-b-c to carve a lower high as Wave 2 of (3). The potential targets for a Wave 2 termination are towards 0.9770 through 0.9870 levels respectively. Alternately, Wave 1 could still be underway and print below 0.9609 to complete. In either case, it is safe to sell on rallies towards 0.9770/0.9870, with a protective stop at 1.0025 and potential targets below 0.9600 respectively. The larger wave counts are also suggesting that USDCHF bearish structure stands to gather further momentum as a higher degree Wave (3) is underway since 1.0027 highs on October 13, 2019.  The entire structure is presenting a potential 5-3-5 Elliott Wave pattern. Wave (1) unfolded into 5 waves between 1.0237 and 0.9659 earlier. A 3 wave corrective rally towards 1.0027 has been marked as Wave (2) here. Since then, Wave (3) is underway and expected to sub-divide into 5 waves, dragging prices below 0.9600 at least. Please note that a general fibonacci relation is Wave 3 travels a distance 1.618 times Wave 1. With this applied on charts, Wave (3) should ideally terminate below 0.9300 levels going forward. A lower degree Wave 1 might have terminated close to 0.9600/10, and Wave 2 higher could be underway. Hence, it is a safe strategy to wait for a pullback and sell again between 0.9770 and 0.9870 levels going forward. USDCHF remains sell on rallies, as potential Wave 2 could be underway towards above levels.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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