NZD/JPY may be trading at the end of a bigger corrective phase. As we can see blue wave B already unfolded first leg A) and B), and current overlapping drop that is underway from 81.00 level can be sub-wave C) with a structure resembling an ending diagonal. If price trades as expected, then we will see a new low near the 77.80/78.00 region for wave B, and a new sharp recovery in minimum three-waves, ideally to around 80.0 area and beyond.
An ending diagonal is a special type of pattern that occurs at times when the preceding move has gone too far too fast, as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B- C formations. In double or triple threes, they appear only as the final “C” wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All our work is for educational purposes only.
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