close icon

USDCHF Bears in Charge. Time for a New Key Level

On May 30th USDCHF was trading near 1.0100 in an attempt to recover from a decline from 1.0238 to 1.0009. The bulls had managed to add more than 90 pips and seemed determined to get the job done. Unfortunately for them, there was an Elliott Wave pattern suggesting their efforts were most likely going to be fruitless.

That day we wrote an article about this pattern, warning that as long as 1.0238 holds, “the odds remain in the bears’ favor.” The chart below, visualizing the pattern, was included in that article.

USDCHF not done falling

The pattern we are talking about is called an impulse. It is a five-wave structure, labeled 1-2-3-4-5, which points in the direction the larger trend is going. Therefore, once the corresponding three-wave corrective recovery in wave (2/B) was over, another decline in wave (3/C) was supposed to follow.

The exact shape and duration of wave (2/B) could not be predicted, but the important thing was that as long as 1.0238 – the starting point of wave (1/A) – was intact, the outlook was going to stay negative. Twelve days later, it is time to take a look at an updated price chart of USDCHF.

USDCHF forming a bigger Elliott Wave impulse pattern

Turns out wave (2/B) was practically over on May 30th. 1.0238 was never tested and the anticipated decline wave (3/C) arrived much sooner than initially expected. On June 5th, USDCHF fell to 0.9854, losing over 240 pips in just five trading days.

USDCHF Bears Should Keep an Eye on 1.0009

As of this writing, the pair is hovering around 0.9915 in what appears to be a consolidation in progress. It fits in the position of wave (4) of a larger five-wave impulse which has been unfolding from the top at 1.0238. The guideline of alternation states that if the second wave was a sharp recovery, we can expect the fourth wave to move sideways.

A triangle or a flat correction both meet this description. Whatever the market is going to choose, waves (1) and (4) cannot overlap. This rule allows us to identify the bottom of wave (1) at 1.0009 as our invalidation level for this count. As long as USDCHF trades below it, more weakness in wave (5) towards 0.9850-0.9800 can be expected.

Do you trade Forex? Updates on EURUSD, USDCAD and USDJPY are included in the Elliott Wave package our subscribers will receive on Wednesday!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Trump Didn’t Drag USDJPY Down. Elliott Wave Did

USDJPY plunged sharply last week after President Trump’s latest China tariff threats. The pair reached a high of 109.32 on Wednesday, July 31st, but finished the week below 106.60 on Friday. However, just because something happens after something else, it doesn’t mean there is causation between the two. In USDJPY’s case, the stage was set…

Read More »

GBPNZD Falls as No-Deal Brexit Looms

The possibility of a no-deal Brexit received another boost after Boris Johnson became Prime Minister of the UK. The market, however, doesn’t seem to like those prospects. The Pound Sterling has been losing ground against the Euro, the Aussie, the US dollar and other rival currencies. GBPNZD is down, too. Less than three months ago,…

Read More »

USDCNH Looks Bearish in the Midst of a Trade War

Less than a month ago USDCNH rose to 6.9621 and it looked like reaching a new multi-year high above 7.0000 was only a matter of time. Unfortunately for the bulls the market chose otherwise. USDCNH fell to 6.8164 on the last day of June. As of this writing, the pair is hovering around 6.8755 following…

Read More »

EURUSD Bulls Needed a Catalyst. Mr. Powell Obliged

EURUSD was trading near 1.1170 at the start of last week. The pair was close to levels last seen two years ago and most expected the slide to continue. But then, on June 4th, Fed Chairman Jerome Powell implied the Central Bank is considering interest rate cuts in response to trade issues. By Friday, June…

Read More »

USDCHF Elliott Wave Pattern and a Key Level to Watch

The Swiss franc was among the very few currencies that managed to stand their ground against the U.S dollar in May. USDCHF reached 1.0238 in late-April. The last time the pair traded this high was in January 2017, two and a half years ago. Unfortunately for the bulls, a 230-pip decline dragged the rate back…

Read More »

USDTRY – Is 8.0000 the Bulls’ Ultimate Target?

The U.S. dollar has been on a tear since the Financial crisis, rising against rivals both big and small. One currency that was hit especially hard is the Turkish lira. USDTRY was down to less than 1.1500 in 2008. Ten years later, in August 2018, it slightly breached 7.1500. Political and macroeconomic factors have certainly…

Read More »

USDCNH Before and After Trump’s Tariff Threat

The negotiations between the two biggest economies are not going as well as investors hoped. Stock market indices are down across the board following President Trump’s new China tariff threat. Another side-effect was the sharp rally to over 6.82 in USDCNH. And while Trump’s tweet about China did, indeed, trigger the surge, the actual reason…

Read More »

More analyses