We are going to follow Elliott Waves on Renko bricks to try to find the turning point for the pair EURCHF. To enhance the chart on the left on another window, just click on the graph. First, let us talk about the big wave (numbers in red). The end of the 3-wave belongs to [1-2.618] of the 1-wave. We could guess we are seeing an extended 5-wave. What are the limits for this wave? They are shown on the chart, but in any case at least we have overpassed the minimum.We see that we are ending the extended 5-wave (numbers in orange). In this case, we may have an extended 3-wave (within the bigger 5-wave). As 2 is more complex than 4 (orange), this last 5 of 5 should be shorter than 1 orange, usually 0.618 of 1. That´s exactly where we are now!! So, perhaps, we are finished and the Euro will go up against the Swiss Franc pretty soon.
Using fundamentals, CHF is overheated so the above makes sense. Besides, the Swiss Central Bank has plenty of reserves which have been used to support the euro (link).
To summarize: if we have CHF, it could be a good idea to put aside a part in AUD, CAD, USD... (euro could be too risky), if we have a mortgage in CHF we could have seen the worst so far, however there is always some risk in the EUR (country default, etc...).
18/06/2010
