The tensions developing in Korea has moved the Swiss Franc to the news headlines. Swiss Franc is typically seen as a risk averse currency and it has strengthened this week when the Korea news flared up.
We will take a step back and review the technical pattern for USD/CHF.
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What stands out to me is the recent downtrend for January 2017 through July 2017. During this period, the markets have been in risk-on mode yet we have seen overwhelming USD weakness creating the 900 pip downtrend for USD/CHF.
Additionally, within this downtrend it appears we have a W-X-Y pattern where the ‘X’ wave is a triangle pattern. We know from Elliott Wave theory that triangles precede the terminal wave of a particular pattern. Therefore, the higher probability move is USD/CHF moving higher to retrace a significant portion of the 2017 down trend.
For those Elliott Wave geeks, you will notice how the (e) wave of the triangle over shot the (a)-(c) red trend line. This is common in Elliott Wave triangles so the position of this triangle places the higher probability move towards the upside.
Bottom line, the .9438 low is a key level to maintain a bullish bias against. The upper green resistance line is the next level of resistance on a sustained move higher.
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—Written by Jeremy Wagner, CEWA-M
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