Sunday, December 30, 2012


Our mid-term cycles suggest $NZDUSD has completed a cycle from 0.7454 (6.1.2012) low. This has bearish implications for the pair and leaves the pair vulnerable to a much bigger drop since the beginning of the rally from 6.1.2012 low. Our initial target is 0.7963 which is 50 fib retracement of the rally from 0.7454 – 0.8477. Failure to find support in this region would make the structure extremely bearish but we would leave that for another day. Today’s article would focus on the decline from 0.8477 – 0.8150, we are viewing the decline as impulsive which means there is more weakness to come. This is further supported by our system which has turned bearish on the pair so we would be looking to sell corrective 3 wave pullbacks for an initial target of 0.7963.
Attached charts show a new low to about 0.8120 can’t be ruled out to complete a 5 wave impulsive decline from 0.8477 peak before wave (( b )) / (( ii )) recovery commences. Failure to break 0.8151 low during the next 24 / 48 hours would increase the probability that wave (( a )) / (( i )) has completed and wave (( b )) / (( ii )) correction is already underway. If so, rallies toward 50 fib (0.8315) should present a shorting opportunity in the pair for the next leg lower.
Regardless of whether pair makes a new low or not in the very short-term we would wait for a 3w corrective pullback to initiate short positions in the pair. We believe this pair has one of the clearest wave structures in FX market right now and we are patiently waiting for the short setup.
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