close icon

GBPNZD Falls as No-Deal Brexit Looms

The possibility of a no-deal Brexit received another boost after Boris Johnson became Prime Minister of the UK. The market, however, doesn’t seem to like those prospects. The Pound Sterling has been losing ground against the Euro, the Aussie, the US dollar and other rival currencies. GBPNZD is down, too.

Less than three months ago, on May 8th, GBPNZD pierced the 2.0000 mark. Two days ago, the pair fell to 1.8280 for a decline of more than 17 figures. We have been skeptical about GBPNZD ever since discovering this corrective pattern on its daily chart in November, 2018.

To find out if the big picture negative outlook is still valid we need to see where does the current selloff fit into the Elliott Wave count. The chart below helps with that task.

GBPNZD keeps drawing bearish Elliott Wave patterns

The 4-hour chart reveals the structure of the price action since the top at 2.0477 in October, 2018. First there was a five-wave impulse down to 1.8127, labeled 1-2-3-4-5 in wave (1). The five sub-waves of wave 3 are also visible, while wave 5 is an ending diagonal.

Then there was a big w)-x)-y) double zigzag correction in wave (2) up to 2.0024. Waves w) and y) are simple a-b-c zigzags, while wave x) is a textbook triangle. This brings us to the current plunge to 1.8280 so far. It can be seen as a five-wave structure, as well, labeled i-ii-iii-iv-v in wave 1.

Are GBPNZD Bulls Ill-Prepared for a No-Deal Brexit?

If this count is correct, once the corresponding three-wave recovery in wave 2 is over, we can expect more weakness in wave 3 of (3). How is the Brexit drama going to unfold remains unknown, but it looks like the market is already preparing for the worst. Impulsive pattern point in the direction of the larger trend. GBPNZD has drawn not one but two of them to the south.

Do you trade Forex? Analyses of EURUSD, USDCAD and USDJPY are included in the Elliott Wave package our subscribers will receive on Sunday!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

USDJPY Pattern Makes More Sense than Politics

The last two weeks were different like night and day for USDJPY traders. The pair fell from 108.47 to 106.48 during the first three days of October and eventually closed the week in negative territory. The last five trading days, on the other hand, told a much different story. Last week, USDJPY rose from 106.66…

Read More »

GBPAUD Elliott Wave Setup Supports the Bears

Between July 30th and August 26th, GBPAUD managed to recover from 1.7561 to 1.8337. Despite the no-deal Brexit prospects, the Australian dollar turned out to be even weaker than its British rival for almost a month. However, GBPAUD is down by roughly 400 pips since August 26th. Traders are probably wondering if this is a…

Read More »

EURUSD Absorbs Economic, Trade War and G-7 News

EURUSD made a new low last week. The pair fell to as low as 1.0963 on Friday adding to the downtrend it has been trading in since February 2018. The last time the European currency traded this low against the greenback was in May 2017. The last few months have been characterized by new lows,…

Read More »

Trump Didn’t Drag USDJPY Down. Elliott Wave Did

USDJPY plunged sharply last week after President Trump’s latest China tariff threats. The pair reached a high of 109.32 on Wednesday, July 31st, but finished the week below 106.60 on Friday. However, just because something happens after something else, it doesn’t mean there is causation between the two. In USDJPY’s case, the stage was set…

Read More »

USDCNH Looks Bearish in the Midst of a Trade War

Less than a month ago USDCNH rose to 6.9621 and it looked like reaching a new multi-year high above 7.0000 was only a matter of time. Unfortunately for the bulls the market chose otherwise. USDCNH fell to 6.8164 on the last day of June. As of this writing, the pair is hovering around 6.8755 following…

Read More »

USDCHF Bears in Charge. Time for a New Key Level

On May 30th USDCHF was trading near 1.0100 in an attempt to recover from a decline from 1.0238 to 1.0009. The bulls had managed to add more than 90 pips and seemed determined to get the job done. Unfortunately for them, there was an Elliott Wave pattern suggesting their efforts were most likely going to…

Read More »

EURUSD Bulls Needed a Catalyst. Mr. Powell Obliged

EURUSD was trading near 1.1170 at the start of last week. The pair was close to levels last seen two years ago and most expected the slide to continue. But then, on June 4th, Fed Chairman Jerome Powell implied the Central Bank is considering interest rate cuts in response to trade issues. By Friday, June…

Read More »

More analyses