Forex Technical Update

Prev: Fibonacci Expansion Targets for the Fearless USD/CHF Bears (8/2)

USD/CHF 8/4/2011 1H Chart
ABC Correction:

- After taking actions against the appreciating Swissie, we saw a rally in the USD/CHF.
- Today, a day later, we see this rally completing an ABC correction. The market is holding this rally below 0.78.
- The wave equality projection goes to about 0.7813. If we have another near-term rally above 0.78 and is capped near 0.7815, we would be complete with a Gartley. In Elliott Wave terms, the structure would represent a zig zag.
- Essentially, the market is waiting to fade USD/CHF as always. It may be a bit tentative at the moment, what with BoJ intervening as well, and making the word intervention a psychological barrier for the fearless bears.
- A break below 0.7730, and a hold below this level should signal a bearish continuation at least back towards the low just a hair above 0.76.
- On the other hand, if the market fails to hold below 0.7730, it has a chance to extend the zig zag towards 0.79 area, near 150% expansion, and the 200SMA.

Can the Swiss Franc keep going since the SNB is "dealing" with the high currency level and not really trying to intervene in the traditional sense? Subscribe and become a member to share your views and join live discussions as well as webinars about the markets.

Fan Yang CMT
Chief Technical Strategist