Elliott wave forex analysis on NZD/USD’s 4-hour chart reveals that the pair is due to resume its selloff from its current levels. Price has recently completed its correction wave after that strong breakdown of support around the .8550 minor psychological level.
Price has dipped to the .8400 major psychological support after the selloff then pulled up for a forex analysis retracement to the 38.2% Fibonacci retracement level. If there’s enough buying momentum left, NZD/USD could still climb a little higher to test the 50% Fibonacci retracement level, which is in line with the broken support zone.
NZD/USD Forex Analysis
Signs of hesitation among buyers are evident though, as NZD/USD is currently consolidating and traders are waiting for a clearer forex analysis signal on which way price might go. A breakdown from the current consolidation pattern would confirm that selling momentum is back while an upside break could lead to limited gains.
Of course this might hinge on the upcoming RBNZ rate decision, during which the central bank might hike interest rates. If they decide to do so, NZD/USD could be in for a strong rally as traders try to take advantage of the positive interest rate differential.
However, the odds of disappointment are high as New Zealand is dealing with weakening dairy exports and lower milk prices. In fact, dairy prices have been sharply plummeting in the past months that Fonterra, its largest dairy exporter, had to revise its production and revenue forecasts lower. If the RBNZ takes this situation into consideration and emphasizes the potential risks to overall economic growth, Kiwi bulls might be in for frustration and bears could take over.
If that happens, NZD/USD could head back to its previous lows at .8400 or perhaps create new lows and edge closer to the .8000 major psychological mark.
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