Triangle on USD/CHF is pointing higher

August 12, 2016 08:43 AM
Elliott Wave Analysis: USD/CHF

U.S. dollar/Swiss franc (USD/CHF) currency pair has made a big pullback since end of 2015 that we see it as a corrective and temporary decline. Notice that falling price action was overlapping. Thus, it has evidence of a contratrend movement so we suspect that downtrend is finished now, especially after we identified an ending diagonal in wave C-circled of a big wave IV. Ideally market is now making a new bullish turn up into wave V that should be made by three waves. If we are correct, then current triangle represents wave B-circled that can send price up into wave C later this summer.


USD/CHF, Daily

On the lower time frame, USD/CHF bounced nicely higher last week that we labeled as wave D) which is part of a big triangle formation. Triangles are made by five waves, so current turn down we see as just another temporary move; it's wave E) that may find a support later this week around 0.9700 region. From there, we will look for signs of a bullish turn in impulsive fashion back towards the upper side of a range.


USD/CHF, 4-hour

A Triangle is a common five-wave pattern labeled A-B-C-D-E that moves countertrend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five-wave affairs that subdivide 3-3-3-3-3.

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/