Welcome to another week of forex trading my friends! Today, I present to you an updated daily chart of the USDCHF pair. From my post about it exactly a month ago back in May 21, I mentioned that the USD is bound to give up some of its gains back to the Swiss franc after the pair had reached a high of 1.1731 in June 1. At that time it was pretty clear that it was already losing its upward momentum. Stochastics was also in the extreme overbought region, suggesting a likely turn around soon. Indeed, it started to reverse and head south after just a couple of days, marking the wave 4 of a 5-wave cycle according to the Elliot Wave Theory.

At present, the pair is below 1.1100 which is, by the way, just around the 50% Fibonacci retracement level that I drew. Now, it could use this mark as a support to propel itself back up but if this mark does not hold, the pair could slide further down to 61.8% Fib or even back at the neckline of the inverted head and shoulders. In any case, in my opinion, the pair looks primed for another up move anytime soon given its oversold condition. A bullish divergence, with the price making higher lows and the stochastics registering lower lows, is likewise present, sggesting that traders could pick the dollar back up in exchange of the Swissy. So if and when it moves higher, it could aim at least for its 2010 high at or even reach the minimum upside target its previous breakout from an inverted head and shoulders at around 1.1900. Such move would then mark its wave 5 of the cycle...

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