Elliott Wave chart analysis for the NZDUSD for 1st August, 2011. Please click on the charts below to enlarge.
With the Kiwi steadily rising I wanted to get an idea of when this rise may end.
The chart above dates back to 1971. I see the fall ending .3902 in 2001 as the end of a five wave impulse. Within it cycle wave II is a zigzag and cycle wave IV is a flat correction, giving nice alternation. Although cycle wave IV is quite a lot larger in proportion to cycle wave II.
If this historic analysis is correct it is depressing news for many Kiwis. Our exporting sector may continue to suffer for some time yet before we see relief in the form of a falling exchange rate. This is not the picture that I wanted to see, but it is the picture that is clearest.
To analyse the rise from .3902 I have used a monthly chart from Net Dania below.
Cycle wave I upwards is a nice impulsive structure. Cycle wave II is an expanded flat correction.
Within cycle wave I ratios are: primary wave 3 has no Fibonacci ratio to primary wave 1 and primary wave 5 is .015 longer than 2.618 the length of primary wave 1.
Within cycle wave II expanded flat correction primary wave B is a 149% correction of primary wave A and primary wave C has no Fibonacci ratio to primary wave A.
In the long term cycle wave III may end about 1.0639 where it would reach 1.618 the length of cycle wave I. This target may be a couple of years away.
This would be followed by a cycle wave IV correction which would not move below .7464. So the Kiwi is likely to remain above this point for up to another decade.
A mid term target is about .9389 where black wave (3) would reach 1.618 the length of black wave (1). About this point we may see some downwards movement for a few weeks for black wave (4) which may not move back into black wave (1) price territory. Price should not move below .7975. Movement below this point would invalidate this wave count at that stage. This mid term target may be a few months away.
The focus of the daily chart above is on black wave (3).
We may have recently passed the strongest part of this upwards movement and from here on momentum may decrease.
A short term target is at .8854 where pink wave iii would reach 1.618 the length of pink wave i. This target may be reached this week.
Thereafter, pink wave iv should take price lower for a week or two, but may not move into pink wave i price territory, and price should not move below .8301. Movement below .8301 would invalidate the wave count at that stage.
Within pink wave iii wave (iii) green is just 0.001 short of 1.618 the length of wave (i) green. This very close Fibonacci ratio gives confidence that this piece of analysis is labeled correctly. At .9033 green wave (v) would reach equality with green wave (i).
This gives us a short term target zone of .8854 to .9033. I favour the lower end of this target zone because within wave iii pink there is already a close Fibonacci ratio between green waves (iii) and (i), and we may not see a ratio for green wave (v) to either of (i) or (iii).
The short term target for pink wave iii may see upwards movement touch again the upper end of the parallel channel drawn here.
When this channel is broken by downwards movement then the middle of this strong third wave is over and the Kiwi would be in a fourth wave correction at pink degree. Although this fourth wave does not necessarily have to break this channel, it is likely that it will.