Technical Sentiment: Bullish
Key Takeaways
NZD continues its slide against the majors, most recently due to a lower than expected Trade Balance which came in at 534M vs 636M. In EUR/NZD’s case, this year’s downtrend could completely reverse if the pair jumps over the hurdle at 1.6020. The necessary trigger could be a decline in ANZ Business Confidence on Tuesday evening or upbeat EUR data on Wednesday, more specifically a decrease in German Unemployment.
Technical Analysis
EUR/NZD is trading around 1.5966, in close proximity of 1.6019 – 21st May swing high. This particular swing high is the most recent high in a bearish configuration. Additionally, it is backed up by the 200 Simple Moving Average on the 4H time frame and a Fibonacci confluence (50% and 61.8% on May’s swings). The pair is no longer pressured by the Daily downtrend since the double bottom reversal pattern around 1.5762, which brings up the possibility of a larger trend correction or even reversal.
A rally above 1.6019 will invalidate the Lower High – Lower Low bearish configuration from the last few weeks, opening the way higher toward 1.6171 (the level will soon coincide with the 100-Day Simple Moving Average) and 1.6283 (2014’s main pivot zone). Daily Stochastic has exited oversold territory after the double bottom pattern, suggesting the bullish cycle is underway right now.
Free Reports:
This bullish scenario will be invalidated if EUR/NZD continues to trade below 1.6000 in the coming days. A break-down below 1.5910 suggests weakness and a third test of the support area at 1.5748/64.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
