Bottom line:  USDCHF medium term bearish structure is intact as prices stay below 1.0023 mark. Potential remains for a push below 0.9500 before a meaningful pullback could occur.

Technical Analysis:

USDCHF bears are in control since 0.9850 highs as expected and discussed earlier. The currency pair has dropped over 200 pips in the last week and is well progressing Wave 3 within Wave (3) lower from 1.0023 levels. Looking into the immediate short term wave counts since 0.9850, Wave 3 has subdivided into lower degree waves 1, ii, and iii until now and it might pullback for wave iv before printing wave v lower again. If the above is correct, prices would ideally remain below 0.9850 potential resistance and push lower towards 0.9500. Most traders who initiated short positions from 0.9850 levels earlier might consider holding with a protective stop at 1.0023 (can reduce risk to 09850) and potential targets below 0.9500 respectively. USDCHF remains a potential candidate to sell on rallies as long as price stays below 1.0023 mark. Looking at the larger wave counts since 1.0237 highs, USDCHF is progressing lower as a higher degree Wave (3) is unfolding. Earlier, the single currency had produced a 5-3 classic Elliott Wave pattern as prices dropped between 1.0237 and 0.9650 in 5 waves; subsequently followed by a 3 wave rally towards 1.0027. There are labelled as Wave (1) and (2) respectively. Since then, Wave (3) has been unfolding lower and USDCHF is now into Wave 3 within Wave (3) targeting lower below 0.9500 levels respectively. Any pullback rally from here should be seen as a potential opportunity to initiate short positions, against 1.0023. Traders might be willing to add further short positions in case a pullback rally should materialize going further. Please note that 1.0023 remains key for bears to continue lower.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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