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Can USD/CHF Rally While US and Korean Tensions are High?

Can USD/CHF Rally While US and Korean Tensions are High?

Jeremy Wagner, CEWA-M, Head of Education


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.

Want to learn more about Elliott Wave theory? Download the beginner and advanced Elliott Wave guide.

Interested in more in depth study on triangle patterns? Start by viewing this hour-long webinar recording on how to identify and trade triangles. (Registration required)

---Written by Jeremy Wagner, CEWA-M

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.