GBP/CHF Elliott Wave Analysis

GBP/CHF – 1.6533

GBP/CHF – Wave 4 correction from 1.5122 has ended at 1.8114.

Despite early anticipated rebound to 1.7113 (our indicated upside retracement target was 1.7105 - 50% retracement of 1.8091-1.6118), as the British pound retreated sharply from there, suggesting the recovery from 1.6118 (tentatively wave ii) has possibly ended at 1.7113 and downside bias remains for further fall to 1.6300, then retest of said wave i trough at 1.6118.

To recap the larger degree count, the selloff from 2.4967 (July 2007) is the beginning of wave V with circle and is labeled as 1: 2.3763, 2: 2.4429, wave 3 extension ended at 1.5122 (sub-divided into i: 2.3490, ii: 2.4209, iii: 1.9605, wave iv: 2.0359 and wave v: 1.5122). Our preferred count remains that wave 4 from 1.5122 has ended at 1.8114 with a: 1.7486, b: 1.5849 and wave c at 1.8114.

Looking ahead, once support at 1.6118 is penetrated, this would confirm the wave ii of wave 5 has indeed ended, then wave iii of 5 would extend weakness to 1.6000, then towards support at 1.5849 and later to next minor support at 1.5647 probably in January 2010.

On the upside, expect recovery to be limited to 1.6800 and said resistance at 1.7113 should continue to hold and bring such a selloff. Only above 1.7113 would risk stronger retracement of the fall from 1.8091 to 1.7337 (61.8% Fibonacci retracement) but price should falter well below resistance at 1.7440/45 and bring another fall later.

Based on ActionForex.com Technical Outlook