Forex Market Analysis

NZD/USD long – attractive risk-reward ratio potential.



The bigger picture on NZD/USD is very clear from the Elliott wave perspective. We see nice unfold of 5 waves down, starting from February 2018. The final move could be labelled as an ending diagonal pattern, which showing us a squeezing of the price action, and bear forces weakening, which should be followed by the strong sharp move up or pullback in at least 3 legs up, usually a zig-zag A-B-C pattern. Also, this trade could give us a very attractive risk-reward ratio potential.



As you can see on the chart, currently we are tracking the A-B-C zig-zag pullback pattern. We have two option, depending on how patient we are. The first one is to buy here with the target above the previous high 95.75 or to wait for this b wave of the A-B-C pattern to be finished in the 50-61% Fibo retracement area, and then to sell DXY with higher profit potential.



As we expected the pair retraced and currently testing the previous resistance, now support level, which stands around 50% Fibonacci retracement. This is our sweet spot to start buying and building gradually our long position. Sooner or later we will see some sharp moves higher above the previous higher high 1,3226. because this leg should be labeled as a wave 3, which is usually the longest and the strongest.



The bigger picture on Aussie is clear, the current price action is labelled as a wave 5, the final Elliott wave. On a smaller picture, the situation is a bit tricky, since we do not have yet any confirmation of when and where the pullback will start. So, for now, we should stay in a wait and see mode. We know for sure that the wave 5 must overcome the wave 4, so on a bigger picture we do expect Aussie weakening, but current market does not give us yet the good risk-reward trading opportunity.


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