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EURNZD Scalps Eye Key Inflection Point- Bias at Risk Sub 1.6720

By , Currency Strategist
03 February 2014 19:40 GMT

Talking Points

  • EURNZD topside bias at risk below near-term resistance
  • Weekly/Monthly opening range in focus
  • Major event risk on tap from New Zealand & Eurozone this week

EURNZD Daily Chart

Forex_EURNZD_Scalps_Eye_Key_Inflection_Point-_Bias_at_Risk_Sub_1.6720_body_EURNZD_DAILY.png, EURNZD Scalps Eye Key Inflection Point- Bias at Risk Sub 1.6720

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURNZD Eyes key resistance threshold 1.6695-1.6720 (January high close)
  • Weekly opening range in focus just below this region- Near-term scalp bias pending
  • Multi-month consolidation pattern resistance at 1.6880-1.6903
  • Broader outlook constructive above 1.6415/25
  • Daily RSI stalling at 60- Nice topside trigger with breach/close above 1.6720
  • Event Risk on Tap: New Zealand Employment Data tomorrownight, Eurozone Retail Sales data on Wednesday & ECB rate Decision Thursday

EURNZD Scalp Chart

Forex_EURNZD_Scalps_Eye_Key_Inflection_Point-_Bias_at_Risk_Sub_1.6720_body_EURNZD_SCALp.png, EURNZD Scalps Eye Key Inflection Point- Bias at Risk Sub 1.6720

Notes: The 1.6695-1.6720 threshold is of extreme technical significance and is represented by the 61.8% extension off the January low, the 61.8% retracement off the December high and the January 2nd close. Our broader bullish bias noted back on January 15th has achieved all three resistance targets and is now at risk below this mark. The pair is just starting to put in the weekly and monthly opening ranges and as such, we will respect a breach/close above this mark with such a scenario eyeing subsequent topside scalp targets into the 1.6880-1.6903 objective where stronger resistance stands.

Our immediate focus is against the .6695-1.6720 range with a break below the weekly opening range low / trendline support dating 1/22 suggesting a larger correction may be in the works. The broader outlook remains weighted to the topside while above 1.6415/25 where the 100 & 200DMAs and last week’s low rest. Note that the daily momentum signature continues to struggle below the 60-threshold with an intra-day RSI range between 40-60 since the start of the week suggesting the market remains rather complacent here.. at least for now. We will look for a break of this range alongside the weekly open in price to put this setup into play.

Be mindful of key employment data out of New Zealand and the ECB rate decision later this week as they are likely to spark some volatility in this pair. Follow the progress of this trade setup and more throughout the trading week in DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Bearish Invalidation

Daily / 30min

1.6695- 1.6720

61.8% Ext / 61.8% Retrace / Oct High / Wkly ORH

Break Target 1

30min

1.6790

Soft Resistance / Pivot

Break Target 2

30min

1.6727

78.6% Retracement

Break Target 3

Daily / 30min

1.6880-1.6903

61.8% & 100% Exts / TL Resistance

Break Target 4

Daily / 30min

1.6982/95

78.6% Retracement / December High

Break Target 5

Daily

1.7105

8/28/13 Close (2013 High)

Break Target 6

Daily

1.7198

1.618% Fib Extension

Break Target 7

Daily

1.7273/93

100% Ext / 2013 Stretch High

Bullish Invalidation

30min

1.6602

50% Retrace / Weekly ORL

Break Target 1

30min

1.6550

Soft Support / Pivot

Break Target 2

30min

1.6510

38.2% Retracement

Break Target 3

Daily / 30min

1.6415/25

100 & 200DMAs / Last Wk’s Low / 61.8% Retrace

Break Target 4

30min

1.6325

78.6% Retracement

Average True Range

Daily (20)

157

Profit Targets 36-40pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for a Live Scalping Webinar Tuesday & Wednesday morning on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)

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03 February 2014 19:40 GMT