Is that a tiny reversal pattern I’m seeing as EUR/NZD tests the confluence of support levels?
That seems to be a double bottom formation right around a rising trend line and a former resistance zone.
Take a look at these inflection points on the 4-hour time frame!
EUR/NZD: 4-hour
EUR/NZD 4-hour Forex Chart by TradingView
Worsening global trade tensions have weighed on the New Zealand dollar while lifting the lower-yielding euro over the past month.
EUR/NZD managed to bust through the 1.9000 major psychological barrier ahead of Trump’s “Liberation Day” announcements, as traders were anxious of slowing demand for commodities and a potential recession.
However, the Reserve Bank of New Zealand (RBNZ) seems to be unbothered lately, as their aggressive easing efforts from last year already seem to be bearing fruit. On the flip side, higher U.S. tariffs on European products revived dovish expectations for the European Central Bank (ECB), dragging EUR/NZD back to the area of interest.
Will it hold as support this time?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the New Zealand dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
A short-term double bottom pattern forming right around the confluence of the ascending trend line that’s been connecting lows since March, the dynamic support at the moving averages, and the broken resistance at the 1.9000 major psychological mark suggests that buyers could regain the upper hand.
If so, look out for a continuation of the uptrend to the nearby targets at R1 (1.9480) then R2 (1.9770) or all the way up to the swing high at R3 (2.0010).
On the other hand, long red candlesticks closing below the area of interest and S1 (1.8950) could suggest that bears are taking over, possibly leading to a drop to the bearish levels at S2 (1.8710) then S3 (1.8420).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
