Stealth Uptrend in EUR/NZD?
EUR/NZD has been stuck in a broadening range for the better part of five months. A succession of higher swing lows and higher swing highs during this time suggests a stealth uptrend could be materializing in the cross rate. Monday’s reversal from just below the 50% retracement of August to January advance and just above an upward sloping trend line connecting the higher lows at 1.5590 lends further support to this view and opens the way for a renewed move higher towards the top end of the broadening range.
Some other technical evidence that points to a possible move higher here is the medium-term Rate-of-Change (ROC). Over the past few months while the cross has been in this broadening range this indicator has done a good job of signaling a turn whenever it has neared current levels. Our time cycle methodology is also positive and favors strength over the next few days.
Charts Created using Marketscope – Prepared by Kristian Kerr
The New Zealand economic docket is pretty clean until next week so news from there is unlikely to impact trading in the cross too much. Europe is a different story, however, as a slew of economic data ranging from German retail sales to Euro-zone CPI is set to be released on Friday. While these releases certainly could impact the cross, the key event to be on the lookout for remains the Italian political situation and whether any clarity can be achieved in terms of forming a government.
LEVELS TO WATCH
Resistance: 1.5825 (38% retracement of Aug-Jan advance), 1.6015 (Last week’s high)
Support: 1.5720 (Minor retracement), 1.5590 (Monday’s low)
STRATEGY – BUY EUR/NZD
Stop: .1.5629(-91 pips)
Target 1: 1.5925
Target 2: 1.6015
Timeframe: 2 days
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
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