Bottom line:  USDCHF counter trend rally is in progress since 0.9613 lows. It could extend towards 0.9850 levels before resuming lower again.

Technical Analysis:

USDCHF rally between 0.9613 and 0.9767 looks corrective and prices need to stay above 0.9613 to confirm another push towards 0.9850 before reversing lower again. The medium term wave structure reveals that USDCHF is unfolding Wave (3) at a higher degree since 1.0027 highs. The drop towards 0.9613 could be seen in 5 waves, terminating Wave 1. If the above count is correct, a Wave 2 rally is in progress and could still push towards 0.9850 before Wave 3 resumes lower.  For the above to hold, USDCHF needs to stay above 0.9613 levels. As an alternate wave count, the drop from 1.0027 could be 3 waves, and Wave 4 might have terminated at 0.9767 as an expanded flat. If the alternate count is correct, we might witness another drop below 0.9613 before Wave 2 rally resumes. In either case, USDCHF remains sell on rallies towards 0.9800/50, with a protective stop at 1.0027 and projected target well below 0.9600 respectively. As a safe trading strategy, one could initiate partial short positions now around 0.9700 levels and remaining on rallies through the 0.9800/50 mark. On the other side, an aggressive trading strategy could be to initiate long positions around 0.9650, with a strict stop at 0.9600 and potential target towards 0.9800/50 levels. The larger wave structure remains intact with bearish bias, till prices stay below the 1.0027 mark, which is Wave (2) of a higher degree. Earlier, USDCHF had dropped from 1.0237 through 0.9659 levels, sub dividing into 5 waves, labelled as Wave (1). This drop was retraced with a counter trend rally A-B-C, towards 1.0027 levels. If the above counts are correct Wave (3) is in progress and should reach below 0.9600 going forward.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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