Forex Watchlist: EUR/NZD Pullback Area

With the ECB statement coming up, I can’t help but look for potential short euro plays to hop in the ongoing trends. Here’s what I’m seeing on EUR/NZD.

The long-term downtrend still seems to be pretty solid, as the pair is moving below a descending trend line connecting the highs on the daily time frame. Price is in the middle of a correction on its latest slide so I used the Fib tool to spot possible entry zones.

EUR/NZD Daily Forex Chart

EUR/NZD Daily Forex Chart

The 50% to 61.8% levels span an area of interest around 1.6000-1.6200 which held as support in the past. Plenty of sellers could be waiting to hop in with short positions around these levels, which also coincide with the descending trend line. Stochastic is still on the move up so euro bulls are still in control for now.

I’m expecting to see a lot of volatility during the actual ECB announcement, probably bringing this pair closer to my sell area. Governor Draghi and his men might even refrain from upping their easing efforts for the time being, and this might trigger a relief rally for the euro. So far, the RBNZ’s economic update stating that additional stimulus and a weaker exchange rate are likely required to bring inflation back to their target levels is weighing on the Kiwi as well.

I haven’t set any orders yet since this pair is still a few hundred pips away from my desired short area. I’ll be paying close attention to how the ECB statement turns out, though, as a decision to stand pat while emphasizing their dovish bias could eventually allow EUR/NZD’s selloff to resume. Besides, I’ve already got a bit of skin in the game with my short EUR/GBP position so I’m not rushing to open a correlated trade with an event risk lined up.

As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

Risk Disclosure
Pipcrawler’s Q2 2016 Blog Trading Performance