NZDUSD – Possible bullish Cypher in the making

NZDUSD has an interesting forecast with a possible bullish Cypher pattern in development. The current price level is also at the 50% retracement of the previous bullish impulse. Although the current expectation is for the next bullish impulse, the continuation of the current bear wave is also a possibility.

Possible bullish Cypher

nzdusd h4 bullish cypher

Why should anyone expect a bullish impulse while the current market seems to be in a bearish “trend”? Well, the XA leg of the Cypher is a clear impulse with a 5-wave structure. In the context of Elliott waves principle, from A point onward is a prolonged correction. On that basis the next impulsive bullish wave is due next, be it a wave B or wave 3.

NZDUSD Elliott wave analysis

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This is my original count that expects a bullish impulse in progress. However, the last couple of weekly candles show a strong bearish sentiment. With previous price-action also suggesting some weakness in the bulls, the alternate count too needs some attention as of now.

NZDUSD alternate count

nzdusd-w-alternate-count-bearish-forecast-24-07-16

This alternate count suggests that a very strong bearish move is due or is already in progress. The chart shows a possible bearish breakout of structure. In fact, the structure resembles a bear flag in the weekly chart.

Conclusion

In a long-term perspective, the bullish forecast still has not enough evidence to support a weekly or monthly impulse move as of yet. But the down-move of last couple of weeks could just be a strong pullback. However, the Cypher pattern play or a bounce off the current 50% retracement level is very likely, in a medium-term point of view. The nature of the reversal bullish wave should provide some clues as to the direction of the next big impulse.

There is no immediate short opportunities as the Daily chart is already in a strong bearish wave. If there will be a bearish breakout of the structure as per the alternate count, then it would be prime time to get in with short positions. But its a long way to reach the bottom boundary of the structure. In the meantime:

nzdusd-d-bearish-forecast-trade-plan-24-07-16

If the bullish Cypher, the Fib levels and the psychological levels go bust, a corrective rally would be a good time to sell.

 

 

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