AUD/NZD was trading around 1.0460 on June 29, when we published AUD/NZD to Throw a Surprise Bull Party, where we shared our opinion, that, based on Elliott Wave analysis, we thought the pair is suitable for long-term buys, as long as 1.0019 was safe. Currently, AUD/NZD is trading around 1.0650, after climbing as high as 1.0763. So far, so good. However, we cannot neglect the fact that there was a decline to 1.0236 in the middle of September, so it is necessary to examine the situation once again, just to make sure that the bullish scenario is still in play.
As the daily chart shows, there is a clear five-wave impulse to the north from 1.0019 to 1.1428, marked as wave (A). According to the Elliott Wave Principle, every impulse is followed by a correction in three waves in the opposite direction. And here comes the question about the exact type of this correction. In June, we though that wave (B) was going to develop as a W-X-Y double zig-zag. Instead, the market chose to turn it into an A-B-C flat correction. In order to do that, it had to extend the three-wave (a)-(b)-(c) simple zig-zag in wave Y into a five-wave sequence, labeled (1)-(2)-(3)-(4)-(5) in wave C. So, does this change the overall outlook? Nope. Not at all. The invalidation level at 1.0019 is still intact, the 5-3 wave cycle is still pointing north, so all we have to do is stick with the bulls and wait for the situation to develop. From now on, targets above 1.1430 remain plausible. In addition, 1.0236 is the new key level, which is not supposed to be threatened, since wave (2) of C cannot decline below the starting point of wave (1). As long as it holds, big gains in AUD/NZD could be anticipated.