EUR/NZD - Monthly
Is locked in a major falling channel. In August 2012 the bottom of the channel was tested at 1.4966 and we have since a small but very complex zig-zag rally to 1.7274. The b-wave of this zig-zag became an expanded triangle, which was the clue that this was only a correction. The decline from 1.7274 has been an x-wave and once this x-wave finally comes to an end close to 1.5653 we should see a new zig-zag rally higher. I would expect the next zig-zag to be much more powerful, but only time will show.
EUR/NZD - Daily
Here I have zoomed in on the zig-zag rally from 1.4966. As can be seen above the (b)-wave became a complex expanded triangle that told us, that this rally of the 1.4966 low was only a correction. That said, looking at the monthly chart there is lots of room to rally and longer term I will be looking for a rally much higher, once the x-wave towards 1.5653 finally comes to an end.
Zooming in closer we can see that we are tracing out the final red wave v of the decline from 1.6787. The ideal target for this red wave v is at 1.5653, where red wave v will be 61.8% of the distance travelled from the top of red wave I to the bottom of red wave iii added to the top of red wave iv. However, we should be aware that once red wave v falls below the bottom of red wave iii at 1.5766 all requirements to this five wave decline is fulfilled. There is also always the risk of a fifth failure, but the only thing we can do is to follow the decline in red wave v and to the best of our abilities break it up in a five wave decline to pinpoint the bottom.
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