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 the larger degree wave counts. The drop from 112.22 through 101.18 was in 5 waves, hence an impulse. The label is not seen on the chart displayed but it could be Wave (1). An impulse is usually followed by a corrective wave.
The rally between 101.18 and 111.75 was in 3 waves, hence corrective. It has been labelled as Wave (2) of the same degree. If the above counts hold well, USDJPY should ideally stay below 111.75 mark and continue drifting lower towards 101.18 and further.
Looking into the lower degree counts since 111.75 here. The drop between 111.75 and 106.00 can be sub-divided into 5 waves. Hence it has been labelled as Wave 1 here. The subsequent rally has been corrective and managed to reach the fibonacci 0.618 retracement of Wave 1, around 109.85.
This has been labelled as Wave 2 here. If the above short term counts hold well, USDJPY should stay below 109.85, and continue drifting lower towards 101.18. Intermediary resistance is seen around 109.85 levels and USDJPY must stay below that mark to keep the bearish structure intact.
The recent boundary that is being worked upon is between 109.85 and 106.00 levels. The currency has managed to pull back through 108.00 levels until now. Probability remains for a push towards 108.30, which is fibonacci 0.618 retracement, before reversing lower again.
Overall, USDJPY remains sell on rallies until prices stay below 109.85 levels going forward.
Technical Analysis Team
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