USD/CHF hits low of the year

Elliott Wave Forecast

Swiss Franc Looks Stronger Against US Dollar

USD/CHF fell to a new low of the year in February so market remains in bearish mode as long as 0.9080 swing high is not breached; but the question is for how long. We are looking at an ending diagonal in wave C that suggests a coming bullish reversal sometime this year, most likely in the second part of 2014.

On the chart we are tracking wave (5), final leg in the pattern that may find a support at 0.8450-0.8550 area. A rise back above 0.9080 would suggest a bullish turning point. 

USD/CHF, Daily Elliott Wave Analysis
 

USD/CHF has turned nicely to the downside since Friday, clearly in impulsive manner. Notice that market also retraced back to the area of wave B swing low after a broken support line of an upward channel. That's a very strong and important evidence for a trend change, thus it suggests that top has been formed at 0.8951 and that market will continue to the downside after any short-term corrective bounce.

Ideally we will see a wave 2 retracement back to 0.8870/90 where broken support line may not become a resistance.

USD/CHF, 4-hr Elliott Wave Analysis

 

Elliott Wave Education: Diagonal pattern

A Diagonal is a common 5-wave motive pattern labeled 1-2-3-4-5 that moves with the larger trend. Diagonals move within two contracting channel lines drawn from waves 1 to 3, and from waves 2 to 4. There are two types of diagonals: leading diagonals and ending diagonals. They have a different internal structure and are seen in different positions within the larger degree pattern. Ending diagonals are much more common than leading diagonals.

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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