AUD/NZD

Between Pivots:
- The AUD/NZD is trading between the 1.28 and 1.24 pivots, closer to 1.24 (support).
- The price action has been bearish in the very short-term, in consolidation in the short to medium term, and has been bearish in the longer medium term (since March). This move since March is in a 3rd wave down, but after an even longer term rally (June 2010 – March 2011).
-  Therefore, we are in the middle of a Aussie – cooling period, where the Kiwi remains robust. During the long rally, it was a strong Kiwi, but an even stronger Aussie (possibly with the additional gold-correlation Aussie has).
Wave Count:
- One short-coming of the Elliott Wave Principle (EWP) is that as a predictive tool, the rules allow for many scenarios. That is why Elliott Wave practitioners always have multiple counts (preferred, secondary, unlikely but still valid, etc).
- For the current decline since 1.3794, the market appears to have a completed 5-wave declining wedge (but with no overlap of wave IV and I, so it’s just a motive wave.
- The preferred count is therefore a completion of an A wave down, now awaiting a possible B wave up from the 1.24 support area (also near 78.6% retracement).
- A break above 1.28 can be a strong evidence that a B wave rally is developing.
- In the 4H chart, we have an (a)(b)(c) wave projection for wave B.
- The clues for the medium term structure is not clear yet, but if the market breaks above 1.2690 area forms a double bottom, and gives a signal for a bullish scenario. Still only a break above 1.28 will also break above the 200SMA and give the medium term outlook a bullish bias towards 1.30, or more aggressively, the 1.32 area.
- Notice also that the RSI was kept below 60, showing bearish continuation, but if it manages to break above 60, the bearish momentum is dead. Above 70, we can confirm a bullish momentum breakout, and add strength to price action if it also breaks above 1.28.
- Without a break above 1.28, the same development we see now can lead to further decline relatively within a declining wedge, or one that turns into a channel, in a 9-wave pattern.
- A break below 1.24 aims at 1.2125 lows from end of May to beginning of July.
RBA Meeting at 12:30AM EDT
- The RBA is expected to keep the official cash rate (OCR) at 4.50% (correction: 4.75%). The market has been pricing in a latter than previously anticipated rate hike for next year instead of this year. Mentions of inflation however will bring market expectations back and give it an “excuse” to respect the 1.24 support, and rebound at or above it.
- Sometimes it will take a session or two before the market gets to a decision, but if the statement shows more concern for inflation then previously, or has any language that indicate a closer rate hike, be prepared for a reversal.

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Fan Yang CMT
Chief Technical Strategist
FXTimes

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.