It’s been 7 months since we published “NZDUSD Approaching a Major Resistance” on June 30th, 2014. The forecast assumed NZDUSD is getting close to the point of reversal, somewhere in the 0.88 – 0.89 area. This is the chart we used to make this assumption:
Soon after that, the pair topped at 0.8835 on July 11th and started declining. Some 11 cents lower we published an update. The following chart gave an idea of where to place our minimum targets: “0.7350 should be reached before we start looking for a bottom.”
In other words, we were expecting at least 400 more pips to the south. Unfortunately, the market decided to put things off for a while. The zone between 0.77 and 0.80 offered nothing but sideways movement. This brought us to the idea of a triangle correction in progress, so on December 4th, 2014, we provided you with an update, called “NZDUSD And The Lack of Direction”. The chart below shows NZDUSD as it was almost two months ago.
As visible, the Elliott Wave Principle suggested we should expect another sell-off in the face of wave (C), as soon as this wave (B) triangle is finished. Yesterday, January 29th, 2015, the New Zealand dollar fell to 0.7232 against the US dollar, thus reaching some 120 pips beyond the minimum target of 0.7350.
However, there are still no signs of reversal. In fact, we think NZDUSD is still somewhere in the middle of wave 3 of (C). This means we should expect lower levels, because waves 4 and 5 of (C) of Y need to be completed, before the whole W-X-Y pattern is over. Here is how this looks on the big picture:
It seems there is still room for more weakness. If this analysis is correct, we should not be surprised to see NZDUSD touching the 0.70 mark. Stay tuned for further updates and do not forget to share your thoughts with us in the comment section below.
