It’s the EUR/NZD channel that keeps on giving! The long-term uptrend is still very much intact, and price seems to be showing bullish momentum from here.
Long EUR/NZD Idea
The pair can be seen bouncing off the ascending channel support visible on the daily time frame, setting its sights on the resistance around 1.7500-1.7600.
In addition, a small bullish divergence can be seen as price made lower lows while stochastic had higher lows. The oscillator has plenty of room to climb, which suggests that price could keep rising, too!
Zooming in to the 4-hour chart, however, shows that price is still trading inside a short-term descending channel and may need to break past the top to confirm that it could keep climbing.
I’m euro bullish mostly due to the shift in the ECB’s monetary policy bias, with the minutes of their December meeting reflecting a bit more hawkishness.
This was also emphasized by ECB member Hansson earlier this week when he suggested that they might end their bond purchases by September. Euro zone economic data has been supportive of potential tightening as well.
The Kiwi has been putting up a strong fight against most of its peers, though, likely driven by a bit of risk-taking, upbeat data from China, and dollar weakness. However, the RBNZ seems to be behind the pack when it comes to shifting to a tightening bias.
I’m sitting on my hands for now and waiting for the market to give me cues on when to enter. I’m eyeing a move past the 1.6850 area with a stop below the short-term channel support of 1.6400 and an initial target at the larger channel’s resistance. What do you guys think?
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