USDCHF seems to have tested its earlier swing lows (support at 0.9375) on July 06, 2020; by dropping to 0.9384. The currency pair has remained shy by a few pips and might have carved a lower degree wave ii at 0.9384. Ideally, USDCHF should be looking to rally towards 0.9800 and further.
Let us have a look at potential wave counts since 0.9180 lows. The USDCHF pair might have managed to carve a meaningful low around 0.9180 in March 2020. The rally between 0.9180 and 0.9900 was an impulse wave, labelled as Wave 1 on the chart.
Ideally, an impulse wave is followed by a corrective wave in the opposite direction. The USDCHF also dropped in a corrective wave labelled as A-B-C on the chart. This structure is also known as an Up-Gartley. The termination of Wave C is labelled as Wave 2 on the chart.
Also note that the corrective drop A-B-C had managed to reach just below the fibonacci 0.618 retracement of Wave 1, around 0.9438. Wave 2 terminated around 0.9375 before pulling back sharply. A morning star bullish reversal candlestick was seen on the daily hart.
Usually, a major bottom or a top is tested before prices begin to move in that direction. USDCHF also dropped towards 0.9384 levels and tested previous lows. High probability remains for a bullish reversal from here.
Overall, USDCHF remains buy on dips until prices stay above 0.9375 support, The upside targets remain intact towards 1.0180, which is the fibonacci 0.382 target.
Technical Analysis Team
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