The last time we mentioned NZD USD in a forecast was on October 27th. In an article, called “NZDUSD ready to resume downtrend?” we assumed the pair should soon regain negative bias. The following chart shows how the situation looked like 13 days ago.
According to the Elliott Wave Principle, after every 5-3 wave cycle the trend should be expected to resume in the direction of the five-wave sequence. On the above-shown chart there was one such pattern and it was the only reason for our bearish expectations. The chart below will show you what happened next.
As visible, yesterday prices fell to as low as 0.7657, which is 220 pips lower, compared to the value, when the forecast was made. However, we should not ignore the fact, that the price action of the latest decline offered plenty of overlapping between the separate waves. This brought us to the idea of an ending diagonal. If this is the correct count, the whole move down from 0.8032 becomes a simple A-B-C zig-zag correction. That is why we think NZDUSD may have just started a larger recovery, which could probably lead the rate back to the zone around 0.7970 or maybe even higher.
