NZDUSD could continue this month bullish move after a fast dip last week. The following 16 July NZDUSD Elliott wave analysis looks at the most likely scenario based on Elliott wave theory.
The Kiwi completed an impulse wave that started in April. The pattern completed at 0.6690 at the beginning of this month. A bullish corrective pattern was expected to follow. If this would happen, then price should advance far above 0.71. The rally started immediately after the pattern completed, up to a minor resistance zone at 0.6824-0.6850 before dropping last week. In the last update, we had a forecast that looked at how far the 1st leg of the bullish correction could go. The first leg was projected as an impulse wave which was to break above the 0.6824-0.6850 resistance. The chart below was used in the last update.
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.
16 July NZDUSD Elliott wave analysis: what next?
Wave (ii) doesn’t appear as a textbook corrective pattern but still look corrective. The wave (ii) dip went briefly below the 61.8% wave (i) Fib-retracement. Price is expected to advance to the 0.6824-0.6850 zone and break above it. The invalidity price still remains 0.6680 – a dip below it would make this forecast invalid. If price can see through the resistance zone with a strong bullish momentum, we should expect an impulsive wave (A) to continue to 0.7060 before the next major bearish correction. Stay tuned for the next update.
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