AUDNZD has been trading between 1.1430 and 1.0900 since the beginning of July. Trading in ranges is much more difficult than following the trend. So, could we expect the pair to start trending soon? The Elliott Wave Principle might help us find the answer. Let’s check a daily chart of AUDNZD, in order to see where does the recent lack of direction fit into the larger picture.
As visible, before the current consolidation, there was a sharp rally from 1.0019 to 1.1428. The most important thing about it is its five-wave impulsive structure. Every impulse is followed by a correction in the opposite direction, which is why the five-wave sequence is followed by a slow and choppy decline. However, it seem the corresponding correction is not over yet. On the above-shown chart we could count it as an unfinished W-X-Y double zig-zag retracement, where wave “c” of Y is missing. According to this count, once wave Y is over, the 5-3 Elliott wave cycle would be completed and the bulls should return. Unfortunately, there is an alternate count, suggesting the bears could stay a little longer.
According to the second count, AUDNZD is in its wave C of an A-B-C flat correction. If this assumption is the correct one, the pair could fall as low as 1.06 before the uptrend resumes. Nevertheless, both counts are bullish. The only difference is in the depth of the current pull-back. The bulls should not give up, as long as the invalidation level at 1.0019 holds.
