Hey everyone! I’m currently looking at this textbook retracement setup on EUR/NZD for my forex trade this week. What do you guys think?
There’s a neat trifecta of technical signals on this pair at the moment, with price pulling back to the resistance turned support around the 50% Fibonacci retracement level. At the same time, a bullish divergence also seems to be forming since EUR/NZD made higher lows while stochastic is drawing lower lows.
Fundamentals suggest that a bounce could take place around these levels since Greece is just a few steps shy of receiving its third set of bailout funds, which would enable it to meet its loan obligations to the ECB this week. Assuming everything goes according to plan, euro bulls might take this as their cue to charge and push EUR/NZD back up to the previous highs at the 1.7100 handle.
As for the Kiwi, I’m thinking that New Zealand’s global dairy trade auction this week would reflect another fall in prices and that the quarterly PPI readings might disappoint as well. This could convince more forex junkies that another RBNZ rate cut is in the cards, possibly leading to a sharp selloff for the New Zealand dollar.
I’m just waiting for additional confirmation from candlesticks and for the setup to meet the 9 Rules for Trading Divergences before going long around my entry area between 1.6750-1.6800. I’ll set a stop below the 61.8% Fib and an initial target at the previous highs.
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