Four days ago, on 2nd October, we showed you an analysis of the GBPCHF exchange rate, expecting it to fall to 1.53. Those of you, who have been observing this pair, probably know that it fell to 1.5372 and then bounced back up to the 1.5460 area. The chart below will help us examine the wave structure of last week’s price action from the Elliott Wave Principle‘s point of view. On the chart you can see the wave 5 ending diagonal, which gave the start to the impulsive decline from 1.5533 to 1.5372, as well as the corresponding retracement to 1.5460 so far. As visible, wave 1/A to the downside has a very clear five-wave structure, so we have to assume that what followed, should be wave 2/B. In other words, we have the common 5-3 Elliott Wave cycle, after which prices are expected to move in the direction of the five-wave sequence for wave 3/C. Furthermore, GBPCHF is approaching the zone of the 61.8% Fibonacci level, which may serve as a strong resistance. In conclusion, as long as the top of 1.5533 stays untouched, we will be expecting a move towards 1.53.
On the chart you can see the wave 5 ending diagonal, which gave the start to the impulsive decline from 1.5533 to 1.5372, as well as the corresponding retracement to 1.5460 so far. As visible, wave 1/A to the downside has a very clear five-wave structure, so we have to assume that what followed, should be wave 2/B. In other words, we have the common 5-3 Elliott Wave cycle, after which prices are expected to move in the direction of the five-wave sequence for wave 3/C. Furthermore, GBPCHF is approaching the zone of the 61.8% Fibonacci level, which may serve as a strong resistance. In conclusion, as long as the top of 1.5533 stays untouched, we will be expecting a move towards 1.53.