GBPCHF has been in a strong uptrend for a long time now, but recently fell down from 1.5430 to 1.5209. Should you buy the dip? The Elliott Wave Principle can provide an answer to this question. On the 4-hour chart of GBPCHF you will see one of the clearest impulses imaginable.
As visible, it is a very nice five-wave pattern, finishing with an ending diagonal in wave (5). According to the theory, every impulse is followed by a correction. However, in this case we expect something more than just a three-wave retracement, because the above-shown pattern seems to be wave C of a larger correction itself. You can see it on the daily chart of GBPCHF below.
The discussed wave C impulse is a part of an A-B-C zig-zag, where wave A is a leading diagonal. Corrections are usually completely retraced, when the larger trend resumes, which means, that if this is the correct count, we should expect the GBPCHF exchange rate to fall beneath 1.3960 during the next year or so. In conclusion – no, buying the dip may not be such a good idea right now.
