After being rejected at the long-term resistance level, the EUR/NZD pair now appears to be focused on testing support.
Will the floor hold up again?
Take a look at these turning points that I watch for on the daily time frame:
EUR/NZD Daily Currency Pair Chart by TradingView
A combination of risk-on flows and relatively positive data from New Zealand seems to be supporting the NZD these days while the Euro is heading lower on negative CPI reports.
The EUR/NZD pair recently fell through the neckline of a short-term triple top pattern, sending it further south of the long-term range resistance level near the 1.8300 level and closer to testing the key support area at 1.7500.
Are we heading for a recovery or a break soon?
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on the EUR and NZD yet, it’s time to take a look at the economic calendar and stay up to date with the daily fundamental news!
The 100 SMA is above the 200 SMA suggesting that the path of least resistance is to the upside or that range support is likely to hold rather than break. On the other hand, the EUR/NZD pair is trading below both moving averages so they could hold as dynamic resistance levels in the near term around 1.7800.
The price appears to be falling through S1 (1.7700) at the moment, indicating a sustained bearish momentum to the next support area or a potential breakdown, which could trigger a prolonged downtrend at the same height as the rectangle pattern.
Just make sure to keep your eyes open for reversal or continuation candles to gauge which direction the EUR/NZD might go next.
Whichever way you decide to run this setup, be sure to practice proper risk management and take a look at our newly launched Forex Correlation Tool!