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NZDUSD Elliott Wave Analysis: Bullish Impulse Suggests More Upside

NZDUSD Elliott Wave Analysis: Bullish Impulse Suggests More Upside

Jeremy Wagner, CEWA-M, Head of Education


What's on this page

NZDUSD Elliott Wave Talking Points:

  • NZDUSD appears to be rallying in an Elliott wave impulse
  • The current impulse wave may continue to .6860 and possibly .6950
  • An immediate move below .6611 would cause us to reconsider the current wave count

NZDUSD has rallied strong from the October 7 lows. The structure and wave relationships of this rally point towards a developing bullish impulse wave that is incomplete. If our interpretation is correct, then we could see a move to .6950 in the coming weeks.

The current Elliott Wave for NZDUSD

NZD/USD formed an extended wave 3 and is currently correcting to complete wave 4

New to Elliott wave corrective patterns? On page 3 of our Elliott wave Advanced guide, we explain wave extensions.

It appears the third wave of a bullish impulse wave finished on the November 7 high. Therefore, NZD/USD may be correcting in a fourth wave.

We consider the fourth wave still in process as NZDUSD has yet to meet the upward sloping Elliott wave trend channel. Typically, fourth waves penetrate this line briefly while retracing 38% of wave 3. Therefore, we cannot rule out an immediate dip to .6680 and would consider that to be a part of the larger bullish pattern.

If NZDUSD does dip, wave relationship show next level targets near .6860 and possibly .6950 to be the fifth and final wave of the impulse. Therefore, it appears the current Elliott wave is wave ‘c’ of 4.

Where is the key level?

The key level for the immediate bullish move is .6611 which is the wave 1 high. There are longer term bullish implications that could drive NZDUSD above 70 cents while the market holds above .6424.

NZD/USD formed an extended wave 3 and is currently correcting to complete wave 4

Elliott Wave FAQs

How does Elliott Wave know the cycle is about to end?

Elliott Wave Theory is a study of wave patterns and their structure. Once you can count a five wave impulse as complete, it is a warning that a larger retracement of that impulse is looming nearby. Therefore, we scale down to a smaller time frame and see that within the fifth wave, it is nearly complete in carving five waves. Since the market is fractal, we can keep zooming in and seeing these wave forms develop on smaller time scales.

Continue your Elliott Wave education by reading our beginners and advanced Elliott Wave guides that will cover some of the basic patterns and how to trade with Elliott Wave Theory.

---Written by Jeremy Wagner, CEWA-M

Jeremy Wagner 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. See Jeremy’s bio page for recent Elliott Wave articles to see Elliott Wave Theory in action.

Communicate with Jeremy and have your shout below by posting in the comments area. Feel free to include your Elliott Wave count as well.

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.