For this week, I’m checking out a rising triangle pattern on EUR/NZD for a potential “break-and-retest” setup for a swing trade. Will the market have the strength to breakout higher?
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This is a straightforward rising triangle setup on EUR/NZD, so there’s usually two choices to go with in this scenario, either a break higher for a buy or a break lower for a sell. But with the trend higher, I’m only looking for an upside breakout, especially with the expectation for a possible rate cut from the Reserve Bank of New Zealand this week. Plus, we’ve seen positive sentiment for the euro lately, even during the crazy price action and huge spike in volatility over the past few weeks, indicating underlying support for the euro. This makes sense since recent economic data from the euro zone shows improvement, albeit a small one.
Overall, I’m short-term bullish on this pair, but I’m not going to put orders up to buy until I see a break and a pullback to the current resistance area around 1.79, and if the RBNZ does cut again. With such a big potential for the RBNZ to go either way, and a spike in either direction, I don’t want to have orders potentially exposed to slippage on the event. For now, I’m in wait-and-see mode, but ready to pounce on the market so stay tuned by following me on Twitter and Facebook!