the NZD/USD continues to slide against the greenback and things are not looking rosy for the kiwi dollar both technically and fundamentally. Today’s post will provide a short-term Elliott Wave update.
Bearish Impulse Incomplete
The bearish impulse that has been unfolding since Feb 2018 appears to be in its mature stage but also still incomplete. Price has created an impulse with an extended wave 3 and a sharp and deep wave 2. Alternation guidelines suggest that the current minute wave 4 is more likely to unfold in a shallow complex manner over the coming weeks. Additionally, Wave 5 of the impulse should tend towards equality or a 1.618% ratio relative to wave 1 (see image above). All this points towards further losses for the kiwi dollar after an extended sideways correction.
The next support area lies therefore between 0.6440 (100% Fib extension of wave 1) and 0.6340 (long term support) but these level are likely not going to be reached for some time while the sideways correction unfolds.
Fundamentally, the Kiwi dollar is in deep trouble. Renewed trade war fears and slowing global growth has negative knock-on effects for exporter New Zealand, while Canada is likely to become the next country that will overtake NZ in terms of interest rates. Further losses are therefore to be expected.
Trading this pair is probably not going to be easy over the coming weeks if indeed a sideways correction is going to set in.
As mentioned in previous posts about this currency pair, the NZD/USD is vulnerable to significantly more losses because a long-term bullish correction may have ended Feb 2018. The drop we have seen throughout 2018 may only be the beginning (Minor wave 1?) of a bigger bearish structure.
All the best along your trading journey