EUR/NZD among EUR crosses trying to turn bullish
Fawad Razaqzada February 27, 2017 2:16 PM
Up until now almost all of the euro crosses have been stuck in strong bearish trends – especially the commodity crosses. However in recent weeks we have seen some interesting bullish patterns develop on the likes of the EUR/AUD, EUR/NZD and EUR/CAD. Whether or not these patterns develop into anything significant remains to be seen. But for the time being they all point to a potential bounce of some sort.
Let’s focus on the EUR/NZD today.
The main weekly chart of the EUR/NZD shows a clear bearish trend. However, the selling pressure has waned in recent weeks. Thus there is a possibility we may see a rebound, although so far there has been no break in market structure i.e. no higher highs yet.
Interestingly though, the EUR/NZD has held above the key 1.4500/40 support area – this was the last high before price took off back in April 2015. Previously resistance, this level has now turned into support. While the cross holds above this area, we are looking for bullish patterns to emerge on lower time frames. However, all bets will be off if the EUR/NZD were to break below here. In this potential scenario, a revisit of the previous swing low at 1.3885 will become highly likely.
But while the 1.4500/45 support holds, there is a possibility we may see a potentially strong rebound. For the technical bias to turn decidedly bullish in the short term though, we do need to see the breakdown of the established bearish trend line around the 1.4560 area. Once this condition is met, we may then see some significant buying interest as the shorts rush for the exits.
Interestingly, on the lower time frames, one can observe a Bullish Gartley pattern (see the inset). This Fibonacci-based price pattern is typically found at the bottom of major downtrends.
So, to recap, we think that there is a good possibility that the EUR/NZD is trying to form a base here, but will be quick to change our minds should 1.4500 support gives way. A break above 1.4860 resistance is required for us to turn decisively bullish.
Source: eSignal and FOREX.com.
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