close icon

GBPNZD: Support Ahead, Downtrend Still in Progress

On November 2nd, GBPNZD was trading above 1.9550. As of this writing, the pair is hovering slightly below 1.8400, meaning the British pound lost over 1150 pips against the New Zealand dollar in a single month. Fortunately, the Elliott Wave Principle put traders ahead of this sharp selloff. The chart below, published on November 5th, shows that Brexit woes were not the only reason to turn bearish on GBPNZD.
GBPNZD Elliott wave forecast
The daily chart revealed a W-X-Y double zigzag correction between 1.6705 and 2.0470. Once a correction is over, the larger trend resumes. Since GBPNZD was in a downtrend prior to this recovery, it made sense to expect more weakness going forward. Now, over 1150 pips to the south later, the long-term negative outlook is still valid and targets below 1.6705 remain plausible.

This, however, does not mean we should expect the decline to develop in a straight line. There are always counter-trend moves along the way and the 4-hour chart below suggest we can anticipate one soon.
Elliott Wave forecast GBPNZD
The 4-hour chart visualizes the pair’s entire drop from 2.0470 to 1.8369 so far. We have labeled it 1-2-3-4-5 in wave (1), because it has the structure of a five-wave impulse pattern. The sub-waves of wave 3 are also easily recognizable.

According to the theory, a three-wave correction in the opposite direction follows every impulse. So, if the above-shown count is correct, we should not be surprised to see a recovery in wave (2) to the resistance area of wave 4 of (1) before the bears return. The short-term positive outlook is also supported by a bullish MACD divergence between waves 3 and 5.

To conclude, the big picture still suggests GBPNZD is headed much lower in the long run. The short-term view, on the other hand, indicates a recovery to roughly 1.9000 is around the corner. However, picking bottoms is extremely risky so long positions are not a good idea. Trading in the direction of the trend and not against it usually pays off handsomely and wave (2) would provide better selling opportunities.

Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover similar opportunities yourself!



Stay informed with our newsletter

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

Privacy policy
You may also like:

USDJPY: Analyze, Prepare, then Let the Market Decide

USDJPY reached its higher level so far in 2019 yesterday. The pair climbed to 112.166, extending its recovery from the 109.71 bottom formed last month. But the bulls didn’t always look that confident. Just a week ago, the pair was hovering around 111.15, down from 111.83 five days earlier. Instead of forming an opinion based…

Read More »

USDJPY Proves You Don’t Need to Pick Tops/Bottoms

USDJPY closed at 111.72 last week and is now within striking distance of its 2019 high of 112.14. But just two weeks ago, the pair was down to less than 110.00 after a sharp selloff from 111.70. Instead of joining the bears simply because the price was falling, we looked for an Elliott Wave pattern…

Read More »

USDCNH Elliott Wave Pattern Points to Recovery

Less than five months ago, on November 1st 2018, the U.S. dollar climbed to 6.9806 against the Chinese yuan, following a sharp rally from as low as 6.2359 in March. Unfortunately for bulls, USDCNH couldn’t maintain the positive momentum. As of this writing, it is hovering around 6.7200. In order to find out if the…

Read More »

NZDUSD Bulls Choosing a Path to 0.7000

Less than three months ago, on January 7th, we published an analysis of NZDUSD. It was trading near 0.6750 at the time, following a sharp decline from 0.6970. However, instead of simply extrapolating the selloff into the future, we examined the chart below through an Elliott Wave perspective. And it gave us a few reasons…

Read More »

USDJPY: How to Buy and Hold a Forex Pair

USDJPY has been in recovery mode since the “flash crash” on January 3rd. The pair plunged to as low as 104.82 that day, but the bears couldn’t maintain their momentum. The market reached 112.14 on March 5th for a rally of over 730 pips. Of course, picking up all of it would have been pure…

Read More »

USDCAD Bears Paying the Price for Failing at 1.3069

A week ago, USDCAD was barely holding above 1.3100. The pair was still in the doldrums following a steep decline from its late-December high of 1.3665 and it appeared the bears had no intention of leaving. But in order to confirm their ambitions to drag USDCAD even lower, they first had to deal with the…

Read More »

EURUSD Reversal Needed “Breathing Space”

EURUSD plunged below 1.1260 earlier today. The pair has been steadily declining during the last twelve months and the latest drop suggests a new low is very likely to be reached soon. But it wasn’t all that clear two weeks ago, when the Euro was hovering around 1.1400 against the U.S. dollar. Then the Elliott…

Read More »

More analyses