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NZD/USD has fallen hard in the past five trading days down nearly 400 pips. A strong move of this nature suggests NZD/USD may be in an impulsive wave lower.

The move lower appears incomplete and the next cluster of wave relationships shows up near .65-.66.

The Elliott Wave model we are following suggests we are in a wave (iii) lower. Third waves tend to be the longest and strongest of the Elliott Wave sequence. Therefore, it should not come as a surprise to see an 800 pip sell off in the past month when it is delivered through a third wave.

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NZD/USD Daily Elliott Wave Chart October 24

NZD/USD Elliott Wave Analysis: No Signs of a Bottom

The sell off appears incomplete and bears will get their chance to trade. Since the pattern is about halfway through, bounces and rallies should be considered temporary and sold. A bounce above .7223 would negate the pattern as we have it labeled above and force us to consider alternative wave counts.

If NZD/USD is successful in falling down to .66, then we will look for symptoms of the third wave to end. At that point, we will anticipate a fourth wave rally. Use the techniques we taught in this “Elliott Wave Impulse Webinar” to anticipate the end of the fourth wave.

Bottom line, pressure remains on the downside and NZDUSD may be the vehicle to trade a bullish USD bias.

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Why do traders lose money? This could be why.

---Written by Jeremy Wagner, CEWA-M

Jeremy is a Certified Elliott Wave Analyst with a Master’s designation. These articles are designed to illustrate Elliott Wave applied to the current market environment.

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