EURNZD Is Drawing a Pattern That Should Scare the Bulls
The Daily chart reveals something that should make the bulls feel uncomfortable. It shows that EURNZD’s massive decline from October 2018 high at 1.79337 to December 2018 low at 1.63279 took the shape of a textbook five-wave impulse. The pattern is labeled 1-2-3-4-5.
EURNZD Bears Remain in Control
According to the theory, the impulses point in the direction of the larger sequence, and a three-wave recovery in the opposite direction follows every impulse pattern. This means that once the corresponding A-B-C expanding flat correction in wave (B) is over, another decline in wave (C) can be expected.
The resistance area around 61.8% Fibonacci level and the blue box zone is where a bearish reversal is likely to occur. However, even if the bulls manage to lift the price of EURNZD higher, the bearish outlook remains valid as long as the high/starting point of wave (A) at 1.79337 is intact.
If this count is correct, traders should not put too much trust in EURNZD bulls right now and start to take profit in the blue box, especially given that wave (C)’s targets lie below wave (A) low at 1.63279.
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EURNZD Bears Remain in Control
According to the theory, the impulses point in the direction of the larger sequence, and a three-wave recovery in the opposite direction follows every impulse pattern. This means that once the corresponding A-B-C expanding flat correction in wave (B) is over, another decline in wave (C) can be expected.
The resistance area around 61.8% Fibonacci level and the blue box zone is where a bearish reversal is likely to occur. However, even if the bulls manage to lift the price of EURNZD higher, the bearish outlook remains valid as long as the high/starting point of wave (A) at 1.79337 is intact.
If this count is correct, traders should not put too much trust in EURNZD bulls right now and start to take profit in the blue box, especially given that wave (C)’s targets lie below wave (A) low at 1.63279.
Did you like this analysis? Kindly let me know in the comment.
Price is currently in wave (ii) of 3 of (C). As long as the price is trading below wave 2 high, EURNZD should be finding sellers on Lower Highs.
Wave (ii) of 3 has the potential to retrace 50 - 61.8% of wave (i) which also lined up with resistance level.