USDCHF found a low on 1.16.2020 (0.9610) and has been bouncing since then. Initial rally from 0.9610 to 0.9729 was in 3 waves which was followed by a pull back and pair has since then made a new high above 0.9729 and today, we would look at the structure of the bounce from 0.9610 and how this bounce fits into the bearish 5 swings incomplete sequence down from April 2019 peak that we mentioned in this article. Before we proceed to take a look at the structure of the bounce up from 0.9610 low, let’s revisit sequence lower from April 2019 peak.

USDCHF Daily chart showing 5 swings Incomplete Elliott Wave Sequence

Chart below shows the decline from April 2019 to June 2019 peak was in 3 swings. This was followed by a FLAT correction higher to October 2019 peak. Since then pair has dropped to a new low below June 2019 low which makes it 5 swings incomplete sequence down from April 2019 peak with 5th swing ended in January 2020 at 0.9610. Pair is currently bouncing in 6th swing and as the decline from April 2019 peak is overlapping and hence not impulsive, expectations are for the current bounce to prove to be swing number 6 and produce another drop as swing 7 toward 0.9487 – 0.9359 to complete the swing sequence down from April 2019 peak. Once 7 swings sequence has completed, pair should see a larger 3 waves bounce at least.

USDCHF Bounce from January 16, 2020 low

In the chart below we can see that the bounce from January 16, 2020 low is unfolding as a double three Elliott wave structure  where the rally from 0.9610 to 0.9729 was in 3 waves i.e. wave ((w)). This was followed by a pull back in 3 waves to 0.9666 and since then pair has already made a new high above 0.9729 which makes it 5 swings up from 0.9610 low. Thus, as dips stay above 0.9666 low, pair is expected to make another push higher to complete 7 swings up from 0.9610 low. 0.9786 – 0.9860 is the ideal area to complete 7 swings up from 0.9610 low. Sellers should be waiting in this area and resume the decline for a new low below 0.9610 low or produce 3 waves pull back and do 11 swings higher or do a larger double three correction to the upside. Since the sequence is bearish so far as October 2019 (1.0029) peak remains intact, sellers should remain in control in 7 or 11 swings.

$USDCHF Elliott Wave view suggests that the rally from 3.5.2018 low (0.9336) is unfolding as a double three Elliott Wave structure where Minor wave W ended at 0.9535. Below from here, Minor wave X ended at 0.942 and the internal subdivision unfolded as a smaller degree double three Elliott Wave structure. Down from 0.9535, Minute wave ((w)) ended at 0.9456, Minute wave ((x)) ended at 0.9494, and Minute wave ((y)) of X ended at 0.942. Minor wave Y is currently in progress as a zigzag Elliott Wave structure where Minute wave ((a)) should end with 1 more leg higher towards 0.954 – 0.957.

A zigzag is a 5-3-5 Elliott Wave structure. The first leg of this zigzag, Minute wave ((a)), subdivides into a 5 waves impulse Elliott Wave structure. From Minor wave X low (0.942), rally to 0.948 ended Minutte wave (i), Minutte wave (ii) ended at 0.9431, Minutte wave (iii) ended at 0.952, and Minutte wave (iv) appears complete at 0.95. Near term, expect 1 more leg higher in Minutte wave (v) towards 0.954 – 0.957 area to end Minute wave ((a)) zigzag of the higher degree. Pair should then pullback in Minute wave ((b)) in 3, 7, or 11 swing to correct cycle from 3/14 low. As far as pivot at 3/14 (0.942) is holding during the dips, pair should resume the rally to new high above Minor wave W at 0.9535.

USDCHF 1 Hour Elliott Wave Chart

USDCHF decline from 3/7 (1.0170) high to 3/22 (0.9879) low could be viewed as a 5 swing move that we have labelled as Elliott wave ((a)). Bounce to 0.9960 was a three move and completed Elliott wave ((b)). Pair has since dropped to a new low below 0.9879 confirming the view that wave ((b)) ended at 0.9960. Decline from 0.9960 – 0.9809 was again in 5 swings and completed wave (i) of ((c)). Pair has already done 3 wave bounce to 0.9868 which could be all of wave (ii) and pair can now resume the decline in wave (iii). Pair doing small 5 waves from 0.9868 high will add conviction to this view but we would need to see a break below 0.9809 low to confirm wave (ii) ended at 0.9868 and wave (iii) of ((c)) lower is in progress. Until then, another push higher towards 0.9884 – 0.9901 area can’t be ruled out to complete wave (ii) as a double three w-x-y structure. In either case, as pair is showing an incomplete bearish sequence down from 3/7 (1.0170) high, we expect the bounces to fail below 0.9960 high for extension lower and in case of another push, expect the pair to find sellers in 0.9884 – 0.9901 area. This view remains valid as far as price stays below 0.9960 high. Ideal target for wave ((c)) lower to complete is in the region of 0.9684 – 0.9569 and we can see the pair turning higher from there in 3 waves at least.

USDCHF 1 Hour Elliott Wave chart – Wave (ii) completed

Pair showing small 5 waves from blue wave (ii) peak will add conviction to this view and a break below 0.9809 will confirm this idea.

USDCHF 1 Hour Elliott Wave Chart – Wave (ii) in progress

Pair has already done 3 waves up from 0.9809 low and has minimum number of swings in place to call wave (ii) completed. However, while above 0.9809 low, another 3 swings higher and a test of 0.9884 – 0.9901 area can’t be ruled out to complete wave (ii) as a 7 swing structure before decline resumes. In either case, expect rallies to fail below 0.9960 high for extension lower in USDCHF.