NZD USD is clearly in a consolidation. The exchange rate appears to be locked between 0.8030 and 0.7650 since the end of September. According to the Elliott Wave Principle, there are only two Elliott Wave patterns, which can explain NZDUSD‘s absence of direction – a flat or a triangle. Let’s take a look at the 4-hour chart of the pair, in order to determine which of the two is more likely.
As you can see, each wave after the bottom at 0.7705 on September 29th has a three-wave structure. This fact, plus the sideways movement, make us think we are witnessing a triangle under construction. If this is the correct count, we should expect another short-lived recovery in the face of wave E of (B), which could lift NZD USD up to 0.7910 before the larger downtrend resumes in wave (C).
