USD/CHF - Long term important low confirmed

On August 11, 2011 I call for a possible bottom in USD/CHF (see my post here http://theelliottwavesufer.blogspot.com/2011/08/gold-and-usdchf.html )

I said that I would try to fine-tune the bottom as we got more evidence. Today the Swiss Centralbank set a minimum target for EUR/CHF at 120. The Swiss Centralbank will defend that point selling whatever CHF needed. That decesion has weakened CHF a great deal and we have seen a "V" shaped bottom, we can also see a inverted S/H/S bottom calling for a move to at least the 94 area.

From an Elliott Wave perspectiv we should now see USD/CHF move higher towards the triangle apex near 105.70. On the way towards 105.70 we will see resistance at 88.50 near the 94 area and finally at 99.57.

Expect a flight out of CHF towards USD, JPY and maybe even some of the minor safe-haven currencies like NOK and SGD. They should do well against EUR.

A snap-shot of the last decline from 117.36 to 70.85.

Gold and USD/CHF

It turned out to be a triangle we where looking at and gold made a new high at 1,813.79, just above my target area between 1,810-1,812. The following decline does have an impulsive structure, but we still need to clear support at 1,720 to be more confident in my call for a top being in place. If however we clear support at 1,720 we should see a continuation down to 1,640, where we find the next important support.

Please see my prior post regarding USD/CHF:
http://theelliottwavesufer.blogspot.com/2011/08/usdchf-testing-long-term-support.html

The long term support line was overthrown, which very well could be a signal of capitulation and that we have a long term bottom in place. It is much to early to judge how the bottom will form, but I will try to fine tune as it progresses

USD at a long term bottom?

The EUR/USD picture (see the chart below) has become very cloudy this last couple of weeks. I have been looking for one last high in EUR/USD to end the ending diagonal since 118.75, but no new top has been seen yet. As long as support at 140.09 isn't broken to the downside we could still see this new high above 149.39, but any break below 140.09 would cripple that posibility.

Looking at the USD-Index might help us a little. The picture is pretty much the same as for EUR/USD. Ideally we should see one last low below 72.69 finishing the ending diagonal, but we have only seen a decline to 73.42. If we break above 75.75 the possibility for the new low would be cripple here too and call for a truncated wave e. A break above 75.75 should set us up for a quick test of resistance at 76.71 and above here will confirm the truncation and confirm that an important low is in place.

As I said a couple of days ago USD/CHF could be at or very close to an important low here too. The most likely scenario will be, that we will see a periode where we more or less trades sideways, before breaking up in earnest. The other possibility will be a "V" shaped bottom, where we will see USD/CHF speed ahead higher. We will need a break above 84.00 just to be able to suggest that the bottom is in, but lets try to fine tune as we get more evidence.

USD/JPY much to my surprise has made a new low. The best fit here againe seems to be, that an ending diagonal is building. We might still see a lower low, but all demands is now fulfilled and any break above 82.23 would indicate that the bottom is in place. A break above 85.54 will confirm the bottom for a rally back to near 115.00.

As long as 81.48 protects the upside we could see a new low, but and break above 81.48 will weaken the call for a new low, while the break above 82.23 will invalidate any call for a new low.

USD/CHF - Testing long term support

It has been some time since we have visited the USD/CHF cross. As can be seen on the chart above we are currently testing major long term support near 76.00. We can count a clear five wave decline from 183.00 down to 76.08 and finally wave C was 61.8% the length of wave A at 80.09 all facts that argue, that we could be close to some kind of bottom. We might not have seen the bottom yet and a possible bottoming process could take quite some time to form, but it would be wise to be on the outlook for evidence, that a bottom could be in place.

Short term only a break above resistance at 82.77 would indicate, that a bottom is in place.

USD/CHF - Minor correction before next rally higher

Sorry for not having any Elliott wave count on this chart.

The rally from 92.80 to 97.07 was wave i of 1 and we are now looking at wave ii down. There are two strong supports, which is worth looking at. The first is near 95.35 and the next is near 95. I do think that support near 95 is the most likely target for this correction.
From a time aspect the bottom is most likely in the early trading hours of the North American trading monday, but we might already see a bottom in late trading hours of the North American trading secession today.

When the correction is done the next rally should take us up to at least 99.24.

USD/CHF - A leading diagonal on a major time frame

Yesterday I wrote, that I had examined the possibility for the decline to be a Leading diagonal i the EUR/USD cross on the hourly time frame. I wrote that it wasn't a option as Leading Diagonals come in 5-3-5-3-5 in either wave 1 or A, which wasn't the case here. Infinitus later wrote a comment to me that Prechter tenth edition of "The Elliott Wave Principle" says that Leading Diagonals maybe could be 3-3-3-3-3, but the jury is still out there.

I can't exclude, that Leading Diagonals could be 3-3-3-3-3 affairs, but in my view that would be a direct violation of Elliott's impulse rule, that wave 1,3 and 5 has to be five wave affairs.

Infinitus asked me if I had ever seen a Leading Diagonal on one of the major time frames? My first answer was no, but then I came to remember USD/CHF, which had the right shape, but I have always regarded it as an Ending Diagonal, but reviewing wave 1,3 and 5 they do look impulsive to me, which makes the Leading Diagonal a real possibility. Wave 2 and 4 also became zigzag's which adds credence in the Leading Diagonal view. I had to use the St. Louis FED data, as mine only goes back to 1984, while the FED data goes back to 1970.

The other alternative would be an Ending diagonal. Ultimately the outcome would be a major USD-rally.