On July 10th 2014 NZD USD hit 0.8833. Today, September 29th, the exchange rate touched 0.7704. Could this 1100-pip move be predicted?
Yes, it could and it was. It was June 30th 2014, when we published “NZDUSD approaching a major resistance”. The next chart shows how NZDUSD looked like on that day.
As you can see, we were expecting a reversal to the downside from the top of the presumed ending diagonal. According to the Elliott Wave Principle, ending diagonals are usually followed by a “swift and sharp” reversal. As the following chart demonstrates, this is exactly what happened to NZD USD.
However, a little relabeling is needed, because it seems that prices are still forming the corrective wave (X). If this is the correct count, we should expect more weakness from NZD USD, because wave C of (X) is supposed to take prices below the bottom of wave A. In other words, 0.7350 should be reached before we start looking for a bottom.
