NZD/USD ? Are We Seeing Start of Bullish Wave 3?

2 min read
HubertM

HubertM

Author

Dear Traders,

The NZD/USD has produced a major bullish bounce yesterday. Could this be the early signs of a large degree Wave 3?

This post will provide an update to my previous NZD/USD analysis.

Bullish Bounce Could Mark Turning Point…

The NZD/USD bounced with much ferocity at 0.7150. This kind of price action could be an early signal that the large-scale Wave 3, which I discussed in my previous post (here), could have begun.

Wave patterns since the highs of previous months point towards a truncated wave 5 of 1, followed by a bearish zig-zag correction as wave 2 (orange). This so far fulfills classic behavior of wave 2s which tend to be more often sharp and quick. The bounce occurred at a previous support which coincided with the Daily chart long-term EMA. If true, the NZD should start making its way up above 0.80 and toward 0.90 eventually, but the situation is not a done deal yet.

Uncertainties Remain

Some things that speak against this bullish scenario  are as follows:

  • Bounce occured at relatively shallow fib levels, i.e. just below 38.2% of Wave 1. 50% or 61.8% is more common for a wave 2.
  • The USD is likely to gain strength over the next few weeks against all the majors (EUR, GBP, and JPY), which could hint at deeper correction for the NZD as well.

The key lies in observing how price unfolds from here on.. we have to see ongoing clear bullish impulses, even if they are interrupted by deep corrections initially. The price path should be fairly straight from a daily chart perspective to confirm a wave 3.

All the best along your trading journey

Hubert

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