NZD/USD can face one minor pullback to the Fibonacci retracement area 0,38% – 0,618%, around 0.6540, which is our previously suggested buying area. This gives us an opportunity to either add to our existing position or to enter for the first time. We expect the resumption of a strong reversal uptrend. As we already highlighted with this kind of clear ending diagonal on the last 5th wave and daily doji candle confirmation, retrace up was highly anticipated, and we do see the pair above 0.67 level.
The current price action on the GBP/USD chart looks like a wedge, which suggests that retrace down should follow, with this counting, labeled as leg B of an A-B-C zig zag pattern. We do believe that current retrace could be labeled as wave 2, and should extend to at least 0,38% Fibonacci retracement, as it is shown on the chart, but not before pullback down first.
As it is shown on the chart, we are tracking the pullback leg 3 or C from the zigzag A-B-C pattern, after 5 waves down already completed all the way down from the 24.January high. The area around 50% Fibonacci retracement or 1.1930, is our targeted region for this long position with the strong reason that wave A and wave C tend towards equality in length, and that retracement for the pullback of the second wave usually comes to 0,50 to 0,618% Fibo levels. The current price action could also face with one more minor pullback below the previous low of 1.1520 and then bounce back up to our projected target.
DAX obviously retraced up, but the bigger picture is not quite clear. Current rebound upwards should come in at least 3 waves, if we modestly label this move as a correction, since it does not have any impulsive attribute. We should, then, expect corrective a-b-c pullback pattern, with the first target at 0,38% Fibo retracements, as it is shown on the chart.
From the EW perspective, the big picture is clear, and we should only wait for the first sign of an impulsive drop on the USD/JPY, since this d leg of and a-b-c-d-e 4th wave triangle, isn’t done just yet. So we do not want to predict, but to wait for the confirmation. This pair setup required patience, since the profit potential is huge more than 600 pips, for the leg final leg e of the 4th wave.