If you think the euro has already topped out, here are a couple of resistance plays you might wanna look at on the 4-hour and daily charts of EUR/USD and EUR/NZD.
For the go-with-the-flow kind of guys (or gals!) out there, this descending channel setup on EUR/NZD’s daily forex time frame is just too good to miss.
The pair is currently testing the channel resistance around the 1.5800 major psychological level at this very moment and could be due for a move back down to support later on or at least until the mid-channel area of interest around 1.5200.
Sellers still have a pretty good shot at regaining control from here as the 100 SMA is below the longer-term 200 SMA, which suggests that the downtrend is more likely to resume than to reverse. At the same time, stochastic is indicating overbought conditions so buyers might wanna take it easy from here.
Then again, the moving averages are showing a smaller gap lately, which means that an upward crossover could take place sooner or later. In that case, euro bulls could find more reason to charge and take EUR/NZD up to the next area of interest near 1.6200.
If you’re gutsy enough to take a quick countertrend play, then this rising channel resistance test on EUR/USD could work out for ya.
Technical indicators are signaling that the euro could retreat from its climb and possibly fill the weekend gap. Stochastic has room to head further south before hitting the oversold levels while the 100 SMA is still below the 200 SMA on this 4-hour time frame.
Shorting at current levels could get you a good reward-to-risk ratio if you aim for the channel support and set your stop past this week’s highs.
But if you think that the euro’s climb is unstoppable, you could wait for the moving averages to complete this looming upward crossover and for stochastic to turn higher from the oversold area before trying to catch a move above the channel resistance.
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