Earlier this month we published an article about AUDNZD, sharing two slightly different, but both bullish counts, which are supposed to eventually lift the pair to 1.1500 or higher. It is too early to say how this is going, but at least the short-term outlook seems to support the bigger picture.
AUDNZD has been declining from its late-May high of 1.0962 to 1.0658 so far. The following 2-hour chart will help us find out if this selloff fits into a larger Elliott Wave pattern and what it means.
It looks like the current weakness actually precedes a five-wave impulse to the upside from 1.0488 to 1.0962. This pattern, whose sub-waves we are going to label i-ii-iii-iv-v, comes to tell us that the bulls remain on the wheel as long as AUDNZD trades above 1.0488. On the other hand, every impulse is followed by a three-wave correction in the other direction.
The recent plunge appears to be a natural simple a-b-c retracement, which is now touching the 61.8% Fibonacci level. This support level often happens to discourage the bears. Given the now complete bullish 5-3 wave cycle, we should expect more strength in AUDNZD from now on, because the theory states that once the corrective phase of the cycle ends, the trend resumes in the direction of the impulsive sequence.