Slowly, the NZDUSD has fallen over 700 pips from its March top. We view the drop as just the beginning of a much larger decline. How low can Kiwi go? You may surprised by our target.
We’ve preferred the bearish count presented above for some time. The rally from .3897-.7463 was in 5 waves. The decline into .5927 and subsequent rally to .8215 are waves A and B of the large expanded flat correction that we believe is underway. Our best count has wave C underway now from .8215. Although the top is likely in at .8215, price should remain below .7921.
Since the top at .8215, the NZDUSD has traced out waves 1 and 2 of large C. Wave 3 of C is considered underway as long as price is below .7921.
There is a chance that the wave ii of 3 top is in place at .7662. We would rather see a deeper wave ii correction though. Second waves tend to be deeper, often reaching the 61.8% of wave i. If reached, .7739 to .7785 (open gap from June 4…see inset) should be strong very resistance. .7739 is also the 61.8% of .7921-.7445. A drop below .7445 warrants a breakout strategy against .7662.