USD/CHF: Wave Count Trade Planning

• Monthly: For swing and intra-day traders, the primary wave count is not very important in trade planning. However, it does not hurt to have a wave count even if it is not resolved or may actually be incorrect. Lower time-frame counts should give us clue to the larger structure. It works both ways. The larger structure also gives “tracks” for smaller internals to adhere to. Thus making Elliott Wave Count only satisfying to those who can juggle multiple scenarios.
• The only thing needed from this popular count of the monthly chart is that we appear to be in a corrective wave. The a and b legs are complete and we are in most likely wave c. This could be wave c of a corrective wave after V, or it could be wave c of IV. This is not resolved. if c terminates at 1.26 it is equality of a, and if c terminates at 1.38 it is 161.8% of a.
• Let’s go down to the daily to see some internals.

The Setup

• Daily: We are currently in a c wave, which should have an impulse wave structure, meaning a 5 (1-2-3-4-5) count.  In a preferred scenario, one where the 3rd wave should be the strongest, we may be done with (iii) of iii, the strongest and central wave of an impulse wave.
• One the other hand, I want to entertain the extended v scenario. The reason I feel this may apply is because of the matching internal structure. Wave v also looks like an impulse wave with extended fifth. (This means that we have completed 1 of c? – not that important until later).
• If this is the case, a trade plan can be drawn.
• Entry will be determined in lower time frame. Early exit strategies can be deployed near the 1.1250 area (possibly 1.30), near the 38.2% retracement level. This is where you may want to think about re-entry strategy, using lower time-frames.
• 50% could be the target, where a parabolic or exit could be used. Remember that the overall structure may still be bullish as we develop our c wave.

The Signal

• 4H: Now that I have established a backdrop and setup, I will be looking for signals and triggers. A break below the currently slightly rising channel, should bring us to that first target near 1.30. A pullback is always a good confirmation for a break.
• Then, another swing down should see support near 1.11, or even 1.1150
• The RSI has been giving us positive reversals. This hinted that the market should continue rallying. However, we no longer have a positive reversal this week, meaning the market is ready to top off.
• These setups and 4H signals should be timed better going down to the 1H time-frame, but I will leave that to you. Remember, there are a lot more that goes into trade planning, but I hope this helps.

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

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