Amidst a bullish dollar, NZDUSD has been bearish this week. Will price continue the bullish correction or continue downside? The following 12 July NZDUSD Elliott wave analysis gives useful insights.
NZDUSD dropped after being rejected at a strong resistance zone. The preceding rally which happened last week is impulsive. When an impulse wave (of any degree) ends at a strong support/resistance zone, a correction in the opposite direction should follow according to Elliott wave theory. Based on this theory, we expected NZDUSD to drop in our update at the beginning of the week when price was hovering around the 0.6850-0.6824 resistance zone. It started dropping from this zone and an update was posted the following day with the chart below.
The drop started as expected, breaking below the 0.6824 lower boundary. A 3-wave correction should be seen coming deeper. We will wait and see if the drop is corrective in order to be more confident about the next rally. An impulsive wave (A) is expected to make way up to 0.7060. We should watch price activities between 0.6748 and 0.6768 intraday Fib-ratio levels. In the next update, we look at this closely. A fast drop below 0.6683, though less likely, would invalidate this forecast and set prices lower.
12 July NZDUSD Elliott wave analysis: what next?
Price dropped to the 0.6768-0.6748 Fib-ratio support zone. The wave (ii) drop is not a textbook corrective pattern but if we see price rally back to break above wave (i), we will see higher prices toward 0.7060. But if price stays below, we might see the continuation of the bearish move deeper into the heart of 0.6683 as it forms a better corrective pattern. If it breaks below 0.6683, the forecast above will be invalid. Stay tuned for the next update.
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