In March 2011, once the AUDNZD cross reached its all-time high level at 1.37954 starting a bearish sequence which drove to 1.00279 on March 2015. Once the oceanic cross found buyers at 1.00279, the price started a triangular structure. In this post, we’ll analyse different scenarios for the AUDNZD triangle.
The 4-Year Triangle Breakdown
The AUDNZD weekly chart shows the triangular formation developed since the end of March 2015. We observe that the breakdown below ((D)) at 1.04883 on make us suspect that the price could visit new lower lows.
Now that we have our macro-vision, we’ll define three scenarios for the oceanic cross.
1. The bearish sequence is incomplete. In this scenario, the wave (3) finished on January 03rd, 2019, when the price found a bottom at 1.01922. Under this context, the AUDNZD is building the wave (4), and wave (5) is not in progress. The conditions to consider this scenario are if price closes below 1.04883 and respect the bearish channel. The invalidation level is 1.07294.
2. Next bearish leg in progress. This scenario considers the end of the first bearish movement when the price touched 1.01922 ((1)), and the end of a wave ((2)). If this sequence is correct, the bearish channel projection ((E))-((1))-((2)) provide us as potential target the area below the parity. The condition to activate short positions is close under 1.04883. The potential profit zone is between 0.98 to 0.97. The invalidation level is 1.07294.
3. Building a bullish cycle. The third scenario considers that the long-term triangle is incomplete. In this case, the rally started at March 22st, 2019 is part of the ((C))-((D)) leg. In this leg, we foresee that the price develops the(C) internal wave. The breakout above 1.07294 should drive to the price to the area between 1.10 to 1.12. The invalidation point for this scenario is 1.04222. Under this framework, using the channelling tool, the long-term target of wave III is near to the 1.16 zone.
Remember that the price is not compelled to move as our forecast proposes. The charts released corresponds to the Elliott Wave Theory application.