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Long-Term Elliott Wave Analysis EUR/CHF and Fundamental Background

 

The following is a contribution by action forex, the latest update in May 2013, a time when EUR/CHF was at 1.2347

EUR/CHF: Wave (iv) of 3 of (C) ended at 1.3835 and wave (v) / 3 has ended at 1.0075

The Long-Term Analysis

 

The long-term downtrend started from 1.9626 (Apr 1985) to 1.4166 (Sep 1995) is treated as wave (A) with

A:1.6285 (Dec 1987),

B: 1.9342 (May 1992) and

C: 1.4166,

then wave (B) ended at 1.6828 with A: 1.7147 (Feb 1997),

B: 1.4398 (Sep 2001),

C: 1.6828 (Nov 2007), therefore, wave (C) is now in progress with the breakdown indicated as above. This wave (C) already met indicated downside target at 1.1455/60 and 1.1300, it could have ended at 1.0075 or may extend one more fall to 1.0000 before major correction.

 

Wave C effectively continued

Why Elliott Wave is compatible with fundamental analysis?

Elliott wave analysis reflects first long-term trends, e.g. the continuing appreciation of the CHF against EUR due to lower taxes, higher competitiveness, better trained personnel (see more) and consequently lower inflation (see the inflation rate parity).

Secondly it mirrors long-term capital movements, for example:

  • 1990-1992: Wave A to top of wave B: EUR/CHF rises, Swiss capital moves to Germany to finance the German reunification and to profit on higher German rates. Excessive and overblown spending.
  • 1992-1996: Wave B to bottom wave (A): EUR/CHF falls with European monetary system breakdown after 1992 to the bottom in 1995.
  • 1996-1998 From bottom wave (A) to A: EUR/CHF rises: Swiss housing crisis, optimism in periphery thanks to euro introduction until 1998 during the Asia crisis.
  • 1998-2003: EUR/CHF falls after German fiscal austerity in 1997. EUR at 0.80 USD and 1.43 CHF in the year 2002.
  • 2003 – 2007 Wave B: The housing bubble in the European periphery and the capital flows from Switzerland to finance that bubble. That led EUR/CHF to 1.68.

 

George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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