The NZD/USD dropped below a highly significant support level today. This post will provide a brief price-action review for the currency pair and a forecast for the next few weeks ahead.
Bullish Scenario is Off the Cards
The NZD/USD broke below the low of Nov 2017 earlier today, thereby opening up the flood gates for a lot more losses over the coming trading weeks. Alarm bells for such a bearish break were on the horizon for a while from an Elliott Wave and fundamental point of view, and the dip below 0.6780 has now fully confirmed that a medium-term bullish scenario is off the cards for good.
The sideways correction since 2015 is very difficult to label with any high degree of certainty, but there is a good chance that it culminated either at the Feb or Apr 2018.
The white labels, showing a 1-2 since Apr, considers that the long-term correction may have been a double three (wxy), which ended in a triangle. This could now open the way for an eventual break of the 2015 low of 0.6150.
The green labels show a similar price path as the first, only slightly less bearish. It suggests that the current drop could be part of an extension of the long-term correction since 2015 via a potential bearish zigzag. It has very similar implications for the weeks ahead, except that another significant bullish pullback could commence once price completes the 5th wave of the first impulse. The closest support lies around 0.6680. If we see a strong bullish reaction then, we have probably witnessed the completion of this first impulse since Feb 2018
There is no good reason for investors to be interested in the NZD. Rising interest rates in the US and a lagging NZ economy provide ample reasons for further losses during the coming months.
All the best along your trading journey.