AUD/NZD: Impulse wave and reversal on Monthly chart

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After forming an ending diagonal in AUD/NZD on the monthly chart shown below from 2006 till mid of 2011, prices thereafter reversed and started moving in a negative direction breaking its previous troughs. In the month of April 2015 the pair made a low of 1.000 and reversed its direction. It gained for consecutive three months, crossing its previous high of 1.1304, thus opening positive possibilities.
In the fifth month from the bottom, prices made a monthly high of 1.683 but failed to give a trend line break thus reversing its winning streak. Currently the pair is approaching near the channel breakout particularly known as throwback.

As per wave theory, after completing an ending diagonal pattern, prices commenced downward journey in an impulse fashion. The last leg ended at 1.000 which is wave v. The current leg is corrective in nature which has three legs in it (a-b-c). As of now it is moving down in the form of wave b, and has retraced 61.8% of the previous up move. Break below this level can drag prices near to support of the channel which was earlier acting as resistance followed by wave c which is impulse wave can be equal to wave a which is placed at 1.1683.

In short, AUD/NZD have shown signs of reversal which can push prices higher near till 1.1683-1.1700 levels.

AUD/NZD Monthly chart


Disclaimer: Please do not circulate this report to Clients and others. The motive for this short term update was to make aware of various patterns and its implications and how it can be used for forecasting various asset classes. Do not trade on this update or take any positions based on the above mentioned view



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