I’m seeing a trifecta of technical signals on EUR/NZD’s 4-hour forex chart and I think the long-term fundamentals line up, too! Is the trend my friend on this one?
As you can see on the chart below, there’s a confluence of resistance levels on the 1.4200 major psychological level. This is in line with the falling trend line, 50% Fibonacci retracement level, and a former support zone. I’m just waiting for stochastic to indicate overbought conditions before hopping in a short trade.
Fundamentals seem to support a continuation of the downtrend, as Greek debt woes keep weighing the euro down. Even if Greece’s government officials and the country’s creditors strike a compromise by the end of this week, I’m thinking that this might not be enough to eliminate fears of debt contagion in the region.
As for New Zealand, well, things are not looking too good at the moment since an RBNZ official just pointed out that they’re not likely to hike interest rates anytime this year. However, I’m inclined to think that they’re not considering rate cuts either, as the recent easing moves in China could be enough to shore up commodity demand from export-driven nations.
I haven’t set any orders yet but I’ve got my eyes locked on the 1.4200 handle for a potential short entry. I’ll be setting my stop past the trend line and the 61.8% Fib, possibly around the 1.4400 mark or higher, and I’ll aim for the previous lows at 1.3900 for my initial profit target. What do you think?
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