EUR/CHF – 1.5125

EUR/CHF: Retreat from 1.5383 should hold above 1.5006 support

Failure to extend early rebound suggests further consolidation would take place and another fall to 1.5073 support cannot be ruled out, however, as long as indicated key support at 1.5000/06 holds, we are keeping our bullish count that the decline from 1.5383 is still the wave (ii) and subsequent rally in wave (iii) probably in late Q4 should take place. Above resistance at 1.5235/40 would add credence to this view and extend gain towards 1.5300, then test of said resistance at 1.5383 would follow. Having said that, break of this resistance is needed to signal the wave iii has commenced for retest of 1.5448 probably in late Q4.

Our preferred count is that the decline from 1.6828 (10 Nov 2007) to 1.4300 is treated as D leg of a larger degree wave (B) and E leg of this triangle wave (B) is in progress with a leg ended at 1.5880, then b leg at 1.4577, the 5-waver c is taking place with wave i ended at 1.5448, prolonged wave ii has ended at 1.5006. Under this count, the wave iii has began with minor wave (i) of iii formed a top at 1.5383 and support at 1.5006 should hold and bring another rally. Above 1.5383 would be the first sign that upmove has resumed but it is necessary to see a break of 1.5448 resistance to confirm and extend to 1.5600, then towards 1.5880 resistance (this level is also just above the 100% projection of wave i from 1.4577 measured from wave ii bottom at 1.5006 at 1.5877).

On the downside, only break of indicated key support at 1.5000/06 would suggest the wave ii is still unfolding, then fall to 1.4909 (61.8% Fibonacci retracement of 1.4577 to 1.5448) would follow but downside would be limited to 1.4800 and support at 1.4577 should remain intact.

To recap the selloff from 1.6828 (10 Nov 2007), the decline from there is now labeled as a-b-c 3 legged move with a: 1.5326, b: 1.6370 (July 2008) and then c leg as well as the wave D ended at 1.4300 (Oct 2008), followed by this E leg which is still in progress and break of 1.5880 resistance would bring the c leg of E to 1.6157 (100% of a leg from b) and later towards 1.6370, however, upside would be limited to 1.6500 and price should stay well below resistance at 1.6828 (wave C top).