Short term
/
Sell
Trade view / 02 March 2018 at 0:42 GMT

USDCHF correction completed, pair likely to track EURUSD

Managing Director / Technical Research Limited
New Zealand
Instrument: USDCHF
Price target: 0.9420
Market price: 0.9108
Background

There will be much discussion about President Trump’s tariff policy over the next day or so. But next week, US dollar traders will turn to more immediate issues, in particular the European Central Bank meeting next Thursday and the FOMC meeting a couple of weeks later.

Yesterday’s Eurozone flash inflation estimate (core holding at 1% year-on-year) all but confirms there will be little change to the steady as she goes guidance the ECB has given in recent post-meeting statements. 
 
The Swiss National Bank is also on hold for the foreseeable future, so there will be few “home grown” influences on USDCHF – apart from the threat of intervention by the bank if CHF was to rise unexpectedly. As such, it is likely to closely track EURUSD.
 
There are only secondary economic data releases are due out of the US on Friday.

Management and risk description

The dollar’s rally from my 0.9200/0.9185 target area has peaked right at key head and shoulders neckline resistance yesterday (see weekly chart below).

I am interpreting this as a completed 4th Wave correction at 0.9490 (see daily chart) to enable the resumption of downtrend toward 0.9190; then 0.9000/0.8965 (where Wave 5/ = 1.618 X Wave 1/ and 0.8965, where Wave 5/ = 61.8% of Waves 1/ - 3/).

In the short term, resistance lies around the mid 0.9400s for selloff towards support at 0.9330/0.9300.

Parameters

Entry: The dollar is seen as a sell at 0.9440/0.9455 today.

Stop: just above 0.9490, initially.

Target: 50% at 0.9334 and 50% at 0.9018.

Time horizon: allow a few weeks for both targets to be met.

Daily USDCHF chart (click to expand)
USDCHF D

















Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more.

Weekly USDCHF chart (click to expand)

















Source: ThomsonReuters 

— Edited by Robert Ryan

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1y
AlexF AlexF
like the trade max also short usdjpyand got out of short gold
1y
xiaoyff xiaoyff
Hi Max, how do you get the second TP level 0.9018?
1y
Max McKegg Max McKegg
mathematically based
1y
AlexF AlexF
Anyone knows what time Theresa May will speak today ?
1y
AlexF AlexF
tx cat
1y
leotdipl leotdipl
Hallo Max, your analysis coincides with my (CHF / USD). I believe that we are finishing the short 3-wave ABC formation that started on December 15, 2016 (from January 2015 to December 15, 2016, we have a wave formation behind it - Correction A). So now, after breaking the 5th wave, the dollar will gain in the framework of the C wave a larger correction of the ABC started on January 15, 2015 (CHF / USD). Of course, we have many months of increases and decreases within this C wave of correction. Do you confirm my analysis?
1y
leotdipl leotdipl
Hallo Max, your analysis coincides with my (CHF / USD). I believe that we are finishing the short 3-wave ABC formation that started on December 15, 2016 (from January 2015 to December 15, 2016, we have a wave formation behind it - Correction A). So now, after breaking the 5th wave, the dollar will gain in the framework of the C wave a larger correction of the ABC started on January 15, 2015 (CHF / USD). Of course, we have many months of increases and decreases within this C wave of correction. Do you confirm my analysis?
1y
Max McKegg Max McKegg
I agree that whilst 0.9490 caps, USDCHF is positioned for a 5th Wave sell-off to new lows for the year, below 0.9190) with best mathematical Target at 09000/.8970

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