Happy Lunar New Year To Everyone! I hope the markets have been treating you well this week. For those who are still eligible for 'ang baos', I hope you had received a bountiful harvest. 恭喜发财，万事如意。
Now, let us revisit the USDCHF Charts we looked at last week and see what has happened since then. I forgot to mentioned that I've used the 4-hourly chart.... just so you know which timeframe you are looking at.
Alright, now if you look at the 4-hourly chart above. You can see that prices have not quite hit the sell-zone I marked out last week. But what's interesting is that prices appeared to have unfolded in five very nice waves.
I'm not too optimistic about prices hitting 1.1120 at this point, because wave 3 at this point is actually shorter than wave 1. So for the 5 wave impluse to be intact, wave 5 should not actually reach 1.1126 at all. So I've actually gone short at 1.1044 when I saw the market reject the price rather sharply at 1.1100. My price objective is still 1.0750, around the previous significant low.
I was looking for a sign of divergence at the 4-hourly chart, but alas, there was none. While it is always good to have divergence at a higher timeframe, sometimes having a divergence at a lower timeframe could still be helpful. So let's see what the 1-hourly chart shows us...
Negative Divergence on USDCHF 1-Hourly Chart
And the 1-Hourly Chart shows a very nice and clear negative divergence on the MACD, which would indicate that the five wave rally has completed.
Possibility of Extension
There is a possibility for an extension, but I think chances are slim. Besides, Wave 5 is unlikely to be extended because Wave 5 would then be longer than Wave 3, thus breaking one of Elliott's rule. In addition, it is also unlikely that Wave 3 is extended because wave 4 of 3 would have entered the territory of wave 1 of 3.
What would technically work is for Wave 1-5 to be part of a larger rally, but I think that's unlikely too. Since I'm counting this leg as a larger wave C, I don't really think it will be moving up that much. In addition, with the Fed cutting rates that much, I really doubt that the USD will rally strongly over the long term. One might argue that Technicals and Fundamentals shouldn't be used together, but that's just an opinion I hold.
What Worries Me
What worries me is that with the conclusion of a Wave C, I should be looking out for the next five wave decline. But what I'm seeing on the charts after my five wave rally hardly looks implusive. I'll approach this with caution and will close my position if future price action does not conform to my wave counts.
Well, that's it for today. Good luck with your trading!
P.S. If you are reading this and like what you see, please leave a comment so I'd know. It does take some time to put all this up, and some comments would help me know at least someone is reading it. :)
Disclaimer: All materials on this blog are purely the writer's opinion and should not be regarded as professional trading or investing advice.
Now, let us revisit the USDCHF Charts we looked at last week and see what has happened since then. I forgot to mentioned that I've used the 4-hourly chart.... just so you know which timeframe you are looking at.
.jpg)
Alright, now if you look at the 4-hourly chart above. You can see that prices have not quite hit the sell-zone I marked out last week. But what's interesting is that prices appeared to have unfolded in five very nice waves.
I'm not too optimistic about prices hitting 1.1120 at this point, because wave 3 at this point is actually shorter than wave 1. So for the 5 wave impluse to be intact, wave 5 should not actually reach 1.1126 at all. So I've actually gone short at 1.1044 when I saw the market reject the price rather sharply at 1.1100. My price objective is still 1.0750, around the previous significant low.
I was looking for a sign of divergence at the 4-hourly chart, but alas, there was none. While it is always good to have divergence at a higher timeframe, sometimes having a divergence at a lower timeframe could still be helpful. So let's see what the 1-hourly chart shows us...
.jpg)
Negative Divergence on USDCHF 1-Hourly Chart
And the 1-Hourly Chart shows a very nice and clear negative divergence on the MACD, which would indicate that the five wave rally has completed.
Possibility of Extension
There is a possibility for an extension, but I think chances are slim. Besides, Wave 5 is unlikely to be extended because Wave 5 would then be longer than Wave 3, thus breaking one of Elliott's rule. In addition, it is also unlikely that Wave 3 is extended because wave 4 of 3 would have entered the territory of wave 1 of 3.
What would technically work is for Wave 1-5 to be part of a larger rally, but I think that's unlikely too. Since I'm counting this leg as a larger wave C, I don't really think it will be moving up that much. In addition, with the Fed cutting rates that much, I really doubt that the USD will rally strongly over the long term. One might argue that Technicals and Fundamentals shouldn't be used together, but that's just an opinion I hold.
What Worries Me
What worries me is that with the conclusion of a Wave C, I should be looking out for the next five wave decline. But what I'm seeing on the charts after my five wave rally hardly looks implusive. I'll approach this with caution and will close my position if future price action does not conform to my wave counts.
Well, that's it for today. Good luck with your trading!
P.S. If you are reading this and like what you see, please leave a comment so I'd know. It does take some time to put all this up, and some comments would help me know at least someone is reading it. :)
Disclaimer: All materials on this blog are purely the writer's opinion and should not be regarded as professional trading or investing advice.
