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.