In this technical blog we’re going to take a quick look at the Elliott Wave charts of EURNZD published in members area of the website. As our members knew, we’ve been favoring the long side in EURNZD since it broke above May 12, 2022 high. Break of May 12, 2022 high created an incomplete bullish sequence in the pair up from April 5, 2022 low against June 3, 2022 low. EURNZD cycle from June 3, 2022 low ended at June 29, 2022 peak and it started pulling back. This pull back took the form of Elliott Wave Zig Zag pattern and members knew it was nothing more than another buying opportunity. In the remainder of the article, we are going to explain the Elliott Wave Pattern and talk about the blue box buying area.
Before we take a look at the real market example, let’s explain Elliott Wave Zigzag.
Elliott Wave Zigzag is the most popular corrective pattern in Elliott Wave theory . It’s made of 3 swings and is sub-divided as 5-3-5. Inner swings are labeled as A,B,C where A =5 waves, B=3 waves and C=5 waves. That means A and C can be either impulsive waves or diagonals. (Leading Diagonal in case of wave A or Ending in case of wave C) . Waves A and C must meet all conditions of being 5 wave structure, such as: having RSI divergence between wave subdivisions, ideal Fibonacci extensions and ideal retracements etc. Wave B could be a triangle, FLAT, Zigzag or a double three structure.
Current view suggests EURNZD is doing black pull back against the June 3, 2022 (1.6348) low. First leg from the peak was in 5 waves which has been labelled as wave A. Bounce was corrective and completed wave B. We have already seen a new low below wave A which makes it an incomplete sequence against June 30, 2022 peak. Current view suggests C leg is in progress toward 1.6672 - 1.6564 area (highlighted with a blue box).
We don’t recommend selling the pair against the main bullish trend. Strategy is waiting for the price to reached marked blue box zone, before buying the pair again. As the main trend is bullish we expect buyers to appear at the blue box for 3 waves bounce at least. Once bounce reaches 50 Fibs against red B high, we will make long position risk free by either moving stop loss to entry position or taking partial profits and putting stop on remaining position below the low within the blue box. Invalidation for the trade would be break of marked invalidation level at 1.6564. As our members know, Blue Boxes are no enemy areas , giving us around 80% or a higher chance to get 3 waves bounce at least from the blue box.
Chart below shows EURNZD made proposed leg down as we expected. The pair has found buyers at the Blue Box area and we are getting good reaction from there. Pull back completed at1.6662 low as a Zig Zag pattern. The rally from the blue box has already made a new high above June 29, 2022 low. Consequently, members who have taken the long trades at the blue box now enjoying profits in a risk free trades. As dips hold above 1.6662 low, expect the pair to continue higher and resume the rally.
Chart below shows pair completed 5 waves up from 1.6662 low and pulled back in 3 waves. Pull back has held above 1.6662 low and now pair has scope to continue higher in wave 3. In case of a break below the recent low at 1.6706, wave (1) could be moved to July 1, 2022 peak (1.6967), 1.6706 low would become wave W and the bounce from 1.6706 low will become wave X. New low below 1.6706 should be part of wave Y of (2) and we should see buyers entering the market again at 100 - 161.8 Fibonacci extension area of W-X cycles. We will show the area with a blue box if market follows this path.
Keep in mind that market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site.