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

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and He also is founder of forex services on provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website:

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