Elliott Wave Analysis of the USD/CHF Currency Pair by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.
The long-term pattern in in the USD/CHF currency pair shows that the August 2011 low was a VERY significant low, essentially ending two terminal Elliott Wave patterns simultaneously. The monthly chart above shows that the 2011 bottom was the end of a decades-long contracting ending diagonal. Also, it shows that wave 5 of the diagonal, which started in October 2000, was an ABC, with the B wave a triangle, and the C wave (in burgundy – primary degree) a terminal thrust from that triangle,. These two terminal patterns put a double exclamation point on that 2011 low, which should mark a very significant low the US Dollar for many years.
Since the August 2011 low, the weekly chart shows a clear 5-wave impulse to the upside ending in July 2012, which confirmed a major trend change in the Dollar from down to up. That impulse was followed by very choppy, overlapping, sideways price action, which the daily chart shows as complete on October 24 as a blue WXYXZ combination correction for black wave 2. That 15-month correction appears to have ended very near the .382 retracement of black wave 1.
Then, as shown on the 180-minute chart, from the October 24-25 lows, the USD/CHF pair carved out a clear 5-wave impulse to the upside ending November 7. That impulse was followed by choppy, overlapping downward movement which today reached a very deep .786 Fibonacci retracement of the Oct-Nov impulse. Choppy overlapping movement is the most difficult to count correctly in real-time from an Elliott Wave standpoint, but if my count shown on the 180-minute chart above is correct, the downward movement is very near an end. With the NFP report coming out tomorrow morning, it appears most likely that an upward impulse in the US$ is imminent, to be NFP kick-started within just a few hours. Invalidation is at .8892, which is less that 80 pips away as of this writing, creating a low-risk, high-reward trading setup.
If this count is invalidated, black wave 2 would have to be continuing in an extended combination correction, with the underlying purpose of seeking a deeper Fibonacci retracement of black wave 1 than .382. This seems unlikely to me at this exact juncture though, because the downward movement since the November 7 high appears corrective in nature. Another reason why I don’t expect invalidation is that the UUP US Dollar ETF, since making the major low in August 2011 (referred to in the first paragraph of this post) has also given 5 blue (minor) waves up for a black (intermediate) wave 1 (July 24, 2012), and a much deeper .786 retracement for its black wave 2 (ending October 23, 2013). Finally, Hurst-Cycle analysis considers that October 23 low the 23.7-month cycle low in the UUP. (See my November 14 post).
Note added mid-day Friday (the next day): NFP didn’t kick start anything, forex-wise. At least not yet. It did push equities higher in keeping with my main SPX count, though. The expectation for a fairly immediate stronger US$ will have to wait until trading opens next week to see if it pans out. Have a great weekend . .
FYI: My schedule has cleared up considerably, so I’ve restarted my On-Demand Service, and will be available to do “On Demands” pretty consistently for the rest of the year.