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TECHNICAL UPDATE (IV): EUR/NZD – Topping out once again?

Updated Dec 5, 2012 6:10:00 PM By Chris Tevere, CMT

EUR/NZD popped briefly above the noted 1.5800-35 convergence zone from the last update, as well as the 200-day sma near 1.5865/70 (not shown), however it was unable to sustain this move higher as it failed above the 50-week sma (1.5885/90) into the 78.6% retracement around 1.5920. From an Elliot Wave perspective EUR/NZD appears to have completed a double zigzag pattern which suggests wave-2 up (black) is likely complete. Additionally, this reversal was accompanied by a daily RSI failure into the key 60/65 level, which tends to hold as resistance if a pair is in a downtrend. Furthermore, it appears price has once again made a head fake above the daily 144 & 169 EMA’s while the 13-day sma remained below and now EUR/NZD is back once again below the aforementioned EMA’s (signifies a potential market failure/bull trap).

Currently, the Euro cross is hovering just above the key 1.5750/55 level, which sees a convergence of trendline support (drawn from the 11/7 low), 13-day sma (red) as well as the 50-day sma (not shown). Interestingly, daily RSI has already broken below corresponding trendline support. Should price follow suit, it could test the bottom of daily Ichimoku Cloud around 1.5690/95 initially and may be poised for a greater decline towards the 1.5390/95 prior low over the ensuing days/weeks.

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE (III): EUR/NZD – Retesting a key level of resistance
Updated Nov 21, 2012 5:20:00 PM

EUR/NZD ended up testing briefly below the highlighted October low (1.5470) as well as the bottom of the Ichimoku Cloud (1.5435), but then found support just ahead of the key 61.8% retracement (blue) around 1.5390/95. As previously noted, the pair did end up bouncing, but has since recovered by more than originally anticipated (citing the 100-day sma). Currently, EUR/NZD has found difficulty into the 61.8% retracement (grey) as well as the 144-day ema near 1.5800/10 and it also sees additional resistance, the top of the daily Ichimoku Cloud, just above at 1.5820/25. Even the 200-day sma could come into play near 1.5865/70 over the coming sessions (not shown). Furthermore, EUR/NZD appears to have made a clear 5-wave impulse move lower from the October 17th high, which from an Elliot Wave perspective suggests the recovery here in the month of November is merely a correction and even if this is not wave-2 up (black), then the next best alternative count would label this wave-B up, followed by another 5-wave move lower in C.

Additionally, daily RSI’s break below the key 40/45 level at the turn of the month suggests the pair is unlikely in a bull market. Ideally, if this is indeed a correction, then RSI’s trendline resistance should hold – Interestingly, this also resides around the key 60/65 level which is often resistance while in a bearish environment. Lastly, while the 13-day sma did provide EUR/NZD with support earlier this week, the fact that it still remains well below the daily 144 & 169 EMA’s suggests the recent advance is likely to terminate in the not too distant future – That said, should price move adversely against us, we would be wrong upon a break above the October high near 1.6055/60.

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE (II): EUR/NZD – Nearing October 2012 lows
Updated Nov 5, 2012 5:20:00 PM

Sure enough, EUR/NZD ended up following daily RSI’s trendline break by breaking below its corresponding trendline last week – Easily reaching the highlighted the 38.2% retracement & daily Ichimoku Cloud Top near 1.5640/50. More importantly, the pair has continued to decline over the past few days and is nearing the critical October lows around 1.5470 as well as the bottom of the Ichimoku Cloud at 1.5435. Furthermore, with daily RSI taking out the key 40 level and the 13-day sma crossing back below the daily 144 & 169 EMA’s, it suggests this move lower since October 17th is more than a mere correction and likely part of a renewed downtrend. That said, it’s hard to imagine EUR/NZD takes out these key technical levels on the first attempt. Accordingly, be prepared for a potential bounce in the short-term, perhaps to around the 100-day sma near 1.5585/90.

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE (I): EUR/NZD – Tested trendline support
Updated Oct 26, 2012 4:45:00 PM

EUR/NZD continued to move lower over the past 24-hours and tested trendline support, drawn from the August low, around 1.5695. Furthermore, daily RSI appears to have broken below corresponding trendline support. Currently, the pair is trading around the 50-day sma (1.5725), but a move towards the daily Ichimoku Cloud Top, as well as 38.2% retracement between 1.5640/50  seems plausible early next week. This would also likely complete the 5-wave move lower – see original hourly chart (in yellow) below, of the Elliot Wave count and a 3-wave correction may follow thereafter.

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE: EUR/NZD – Failure above 1.60 sets stage for sub-1.55
Updated Oct 25, 2012 6:15:00 PM

EUR/NZD has begun to show the downward acceleration that I was looking for 10 days ago – See TECHNICAL UPDATE. Ultimately, very little has changed from a technical perspective, however it appears the shorter-term (hourly) and longer-term (daily) time frames have aligned. Moreover, we have identified 3 different points of reference to potentially trade against – 1.5895 (13 & 200-day sma’s), 1.5905/10 (October 19th low) & 1.6060 (October 16th high).

That said, here’s a few technical bullets on why I believe EUR/NZD downside could prevail:

  • Saw a daily RSI bearish divergence into the 1.6055/60 high
  • Continued to get rebuffed by the 50% retracement
  • 13-day sma is crossing in-between daily 144 & 169 EMA’s while price is below (bearish)
  • Sees hourly RSI bullish divergence (see yellow highlight)
  • Elliot Wave Count in the midst of wave-4 up
  • EW Count invalid if above 1.5910 (wave-1 low) as well as 61.8% retracement
  • Watch for potential daily RSI trendline break in advance to price (leading indicator)
  • Prior October low resides near 1.5470
  • Bottom of daily Ichimoku Cloud is 1.5435/40

Chart Source: Forex Charts by eSignal

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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