While Morgan Stanley is already bearish on NZD/USD for fundamental reasons, MS outlines the pair technical picture in its weekly FX chart pick arguing that its also bearish on all time frames. MS’ analysis is based solely on the Elliott Wave Method.
On the 10-year chart:
“NZDUSD is part of a broader correction, in a b wave. The currency pair has traded close to the top of a trend channel, and begun its move lower. The substructure peak at 0.8746 was a (b) wave top, indicating that the (c) wave should move NZDUSD lower,” MS projects.
On the 2-year chart:
“NZDUSD completed a c’ wave part of the corrective substructure of the (b) wave shown above. NZD market positioning according to our positioning tracker is at extreme longs, levels which have previously been bearish for the currency. The bearish signal is emphasised by the presence of negative divergence seen in the 14-day RSI,” MS notes.
On the 90-day chart:
“From a low of 0.8066, NZDUSD has formed a 5- wave impulsive structure. The wave has now begun to correct. A 61.8% correction would move NZDUSD down to 0.8317. In the near term moves below the 4th wave low of 0.8514 would confirm a bearish signal. We currently have a short NZD position in our portfolio, targeting 0.81,” MS adds.
