close icon

NZDUSD Seven Trading Days Later

Last Monday, November 21st, while NZDUSD was trading around 0.7020, we published an article called “NZDUSD Poised for a Corrective Recovery”. In our opinion, based on Elliott Wave analysis, the pair was “providing an opportunity for the bulls to achieve a three-wave rally to at least 0.7110.” Instead of relying on economic data or political news, the chart below was all we needed to come up to this conclusion.
nzdusd-21-11-16
The logic behind our positive outlook was simple. The decline in NZDUSD between 0.7402 and 0.6984 was a five-wave impulse. According to the Wave Principle, every impulse should be followed by a three-wave correction in the opposite direction, which usually retraces at least back to the price territory of wave 4. The progress, made by NZDUSD in the last seven trading days, is visible on the updated chart below.
nzdusd-29-11-16
The first thing you will notice is that the A-B-C correction does not look exactly like the one we imagined. Instead of a zig-zag, the market chose an expanding flat correction, which includes a new low in wave B. This is the answer to the question why it is not a good idea to trade within a correction, especially in such a short term. Because you may be right that a correction is likely to begin, but you can never be sure what type of correction it is going to be, which makes trading within corrective patterns extremely difficult. On the other hand, wave C climbed to as high as 0.7128, achieving the 0.7110 level, mentioned in the forecast last week. Which leads us to the present, where the 5-3 cycle seems complete. According to the theory, the trend should now be expected to resume in the direction of the five-wave sequence. Just like it was not a good time to join the bears near 0.7020, it is not a good idea to become a bull near 0.7120. If this is the correct count, NZDUSD is likely to regain negative bias from now on. Levels below 0.6980 seem plausible.



Stay informed with our newsletter

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

Privacy policy
You may also like:

Elliott Wave Setup Helps EURUSD Add 325 Pips

EURUSD has been under pressure for over two years now. The pair reached 1.2556 in February 2018, but has been making lower lows and lower highs ever since. Yet, the past couple of weeks painted a different picture. Between May 18th and May 29th, the euro surged 325 pips against the U.S. dollar. In those…

Read More »

EURGBP Pattern Signals Bullish Reversal Ahead

EURGBP has been in free fall since March 19th, when it rose to 0.9500. A month and a half later now, the pair is hovering below 0.8730, down 8% from the peak. Is the downtrend going to continue or should we expect a change of direction? That is the question we hope to answer in…

Read More »

GBPUSD Aiming at 1.30, but May Tumble to 1.21 First

Not long ago, we shared our long-term view of GBPUSD. In our opinion, the down-phase of the pair’s cycle, which is in its 13th year now, is almost over. One last dip to 1.1000 is likely to be followed by a major bearish reversal and the start of the next up-phase. Now, we are going…

Read More »

British Pound ‘s 13-Year Downtrend Almost Over

The thirteen-year period between 2007 and 2020 started with the biggest crisis since the Great Depression and is about to end with the biggest crisis since the Great Depression. Between the two, the longest economic expansion on record took place. And while stock markets around the world reflected that recovery, some currencies have been in…

Read More »

Ahead of the Move: EURUSD Adds 500 Pips in a Week

At the start of last week EURUSD was trading below 1.0700. The pair had fallen from as high as 1.1496 in just two weeks as coronavirus cases in Western Europe kept climbing disturbingly fast. And while fundamental traders had every reason to expect more weakness, the charts were sending a different message. The Elliott Wave…

Read More »

GBPUSD Completes Pattern, Uptrend to Resume

When we last wrote about GBPUSD Britain was still an EU member. Today, that is no longer the case as the country left the Union on January 31st. On the other hand, the pair is roughly unchanged, currently hovering around 1.2900. In fact, GBPUSD has been tracking a classic Elliott Wave pattern. Take a look…

Read More »

GBPUSD To Resume Uptrend Once Correction Ends

The Brexit saga continues as Boris Johnson’s re-election puts Britain firmly on the path of leaving the EU on January 31st 2020. And while the results of the June 2016 referendum caused a crash to 1.1650 by October 2016, GBPUSD is trading near 1.3100 today. The chart below reveals the structure of the recent recovery…

Read More »

More analyses