Completed ending diagonal on USD/CHF suggests higher levels to follow

June 13, 2017 09:16 AM
Elliott Wave Analysis: USD/CHF

On the 4-hour chart of U.S. Dollar/Swiss Franc (USD/CHF) currency pair we can see that at the end of May, the market accomplished a three-wave recovery in Wave 4 as part of a downtrend; at the 0.9807 level from where a drop occurred, which we labeled as final Wave 5 of C). Ideally that was an ending diagonal; a strong reversal pattern that looks to have formed a bottom at the 0.9612 level and a current recovery is already at Wave 1/A and 2/B of a three wave rally. That being said, more gains are expected to follow.

USD/CHF, 4-hour

The ending diagonal is a special type of motive wave that occurs primarily in the Wave 5 position when a  price has moved too far and too fast. Some ending diagonal triangles appear in the C wave of an ABC correction. In all cases, the ending diagonal terminates the move of larger patterns. They consist out of five waves, with each having three more sub-waves and they usually suggest sharp reversals.

Basic ending diagonal:

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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/