USDCHF in strong trend down?

[Mercury]

As mentioned in the DX thread recently USDCHF looks to me like it has made a medium term turn at a wave B and is now proceeding down in a fairly strong wave C.  If you look at the LT Monthly chart you see a massive Triangle that was broken in a small rally in 2014 (coincident with a DX rally after the 2014 Fed Jackson Hole conference) and then confirmed after the de-pegging from Euro debacle in Jan 2015.  Since then the pair have rallied to a slightly higher high (wave 1 - pink - weekly chart) and are now apparently in an A-B-C retrace to wave 2 (pink).  The recent high and turn came at the Fib 62% and weekly chart upper triangle line with Negative Momentum Divergence (NMD) and a pin bar AND inside bar price action formation.  Since then the market has moved down quite sharply and I am looking for a wave 1-2 and then strong drop down in wave 3 to come.

 

Impossible to know which of the 2 scenarios I highlight on the weekly chart will come to pass but for now I favour scenario 1 and will watch DX and other similar pairs for clues while I Shepard my shorts and seek to add at appropriate rallies.

 



[Mercury]

So far so good for my road map in that this market did indeed turn at the indicated area and is now proceeding down in a fashion that is consistent with the forecast wave C (i.e. a strong move).  If we see a reversal in a retrace fashion from the lower Triangle line and the move down continues as it has  so far then this will be a 1-5 wave pattern.  If the reversal is in A-B-C and then turns at a lower high then another strong move down is on the cards.

 

My approach is as follows.  Hold my Shorts taken at the previous high and seek further shorts as the market turns at a potential wave 2 retrace (i.e. sell the rallies).  The Daily chart shows that a Wave C could descend all the way back towards the weekly chart Triangle line and/or Fib 76%.

 

The alternative is that the market stays within the Triangle for another few rounds but a strong move down is aligned to other FX crosses and DX assuming the USD rally scenario doesn't materialise in the near future.