NZD/USD Wave Analysis, November 18, 2010

After completing a full positive Elliot cycle, made up of five waves, the New Zealand dollar – United States dollar pair is expected to have a correction movement, which, according to the Elliot wave theory should move in a 3-wave downwards pattern (2 downwards waves and one upwards wave).

The last downwards movement has taken the pair from the high of 0.7975 to a low of 0.7630, and now represents the first corrective wave (A) which should be followed by ascending wave (B) that will move the pair back up.
Positive wave B has already broken through the minor trend line of wave A. From here the pair is expected to move towards the 0.7890 resistance level. At this level one will be able to reverse direction and move into a sell position in order to catch the last descending wave (C), which is expected to take the pair back down to a new low of 0.7600 US dollars per one New Zealand dollar.

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