I spy with my one good eye this neat technical setup on EUR/NZD’s daily time frame. Think the RBNZ decision will allow the uptrend to resume?
Long EUR/NZD Setup
This pair has been cruising above an ascending trend line connecting its lows since February. Price looks prime for another test of the rising support level while stochastic is heading south to indicate that bearish momentum is present.
Zooming close to the 4-hour chart shows that the trend line coincides with an area of interest around the 61.8% Fibonacci retracement level. The pair seems to be bouncing off already, though, and stochastic is starting to turn higher on this time frame.
I’m tempted to enter at market for fear of missing the move, but I also do know that the upcoming RBNZ decision could spur a lot of volatility. With that, I’m sitting tight for now and waiting for an actual test of the trend line or a long green candle before deciding if I should hop in at market.
My fundamental analysis tells me that, even though the RBNZ decides to highlight the recent improvements in the New Zealand economy this time, they’re still a long way off hiking interest rates. On the other hand, the ECB is already set to start tapering its asset purchases by next year and is also looking into increasing rates a few months later.Besides, there are still plenty of problem areas in New Zealand, such as its dairy sector which reported its third consecutive decline in prices during the GDT auction. This could weigh on revenues, payouts, and overall inflation, and it doesn’t help that quarterly inflation expectations already took a hit.
I’m keeping my eye locked on the 1.6675 to 1.6825 area for potential entry opportunities on either another dip or a pickup in bullish momentum. I’ll likely set a wide stop below the trend line or 1.6500 handle and aim for the swing high around 1.7200 if I’m able to enter. Stay tuned!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.