There is something about the 0.6000 mark in NZDUSD. The pair has been gravitating around it for over two decades now, sometimes breaching it notably, but mostly using it as a support level. The pair bounced up from it in 2004, 2006 and 2015, and briefly breached it in 2008, 2020 and 2022. More recently, the exchange rate has been hovering in a narrowing 500-600-pip range around it. The question is, can we expect another notable rally soon or is another major dip below 0.6000 around the corner?
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The hourly chart above reveals that the recent rally from 0.5852 to 0.6222 is a textbook five-wave impulse. We’ve labeled the pattern 1-2-3-4-5, where the two lower degrees of the trend are also visible. Wave 3 can be marked as (i)-(ii)-(iii)-(iv)-(v), where wave (iv) is an a-b-c running flat correction. The impulsive structure of wave (iii) of 3 is marked i-ii-iii-iv-v.
If this count is correct, the recent pullback from 0.6222 to 0.6097 is the first wave – A – of the three-wave correction, which follows every impulse. Wave B is up currently in progress as a simple a-b-c zigzag, before the bears can return in wave C towards the support near 0.6050. Once there, the 5-3 Elliott Wave cycle would be complete and it would be time for the NZDUSD bulls to take the lead again. Even if a deeper retracement happens to develop, the overall outlook remains positive, unless the pair drops below 0.5852.
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