USDCHF: Bearish Waves Are Pointing Towards 0.9050

By: Gregor Horvat | Tue, Sep 24, 2013
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USDCHF is showing some nice sharp downside price action after recent sharp fall to 0.9100 area which appears to be wave three of three of an impulsive structure. If that's the case then we know that market will move even lower in sessions ahead but after a completed fourth wave pull-back that is now in progress. Ideally pair will test 0.9150 area before downtrend resumes. Generally speaking trend is clearly bearish on the 4h time frame posted below and it will stay down as long as 0.9228 level is not breached because we know that wave four must not trade into a temerity of a wave one.

USDCHF: Bearish Waves Are Pointing Towards 0.9050 Chart

Impulse is the most common motive wave.

Typical Elliott Wave Impulsive Pattern

• wave 1 must be an impulse or a leading diagonal
• wave 2 can be any corrective pattern except a triangle
• wave 2 must not retrace more than 100% of wave 1
• wave 3 must be an Impulse.
• wave 3 must be longer than wave 2
• wave 4 can be any corrective pattern (zig-zag, double or triple zig-zag, triangle, flat, double or triple three)
• waves 4 must not trade into a territory of a wave 1
• wave 5 must be an impulse or an ending diagonal
• wave 3 must never be the shortest wave when compared to waves 1 and 5.

Impulse extension

Most impulses contain what Elliott called an extension. An extension is an elongated impulse with exaggerated subdivisions. The vast majority of impulses contain an extension in one and only one of their three actionary subwaves.

The fact that extension typically occurs in only one actionary subwave provides a useful guide to the expected lengths of upcoming waves. For instance, if the first and third waves are about equal length, the fifth wave will likely be a protracted surge. Conversely, if wave three extends, the fifth should be simply constructed and resemble wave one. In the market, the most commonly extended wave is wave 3.

Impulsive Elliott Wave Patterns Chart 2


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Gregor Horvat

Author: Gregor Horvat

Gregor Horvat

Gregor Horvat

Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of, but before that he was working for Capital Forex Group and His feature articles have been published on:,,, Action forex, Forex TV, Istockanalyst, ForexFactory,,, etc. He recently won the award on for Best Forex Analysis in 2016. At he helps clients and educate them about the Elliott wave prinicple and how to label and track unfolding patterns in real time.  His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators.

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