EURNZD – Short on Break of Neckline
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EURNZD is in the process of completing a ‘head-and-shoulders’ formation, with the ‘neckline’ currently coming under pressure at the time of this writing. Some may view it as a double-top given the proximity of the ‘head’ and ‘left shoulder’, in any event a breach of the neck-line is the technical trigger. The development of this bearish sequence also comes at an interesting spot, with a trend-line from September 2015 coming down over the ‘head’.
The confluence of trend direction, trend-line resistance, and pattern development make this a compelling set-up. The official trigger will be on a closing daily bar below the neckline, and will also put EURNZD beneath the 200-day MA which it has held well since mid-March.
The measured move target (MMT) is about 300 points lower, under 14900, aligning very near an area of support running back to November. The second target arrives at the lows from February in the vicinity of 14589/35. The stop should be set sufficiently above the neckline to avoid a shake-out. The distance between the entry, stop, and targets make for a good risk/reward situation.
Created with TradingView
Entry – Daily close below the neckline
Stop – 15265
Target 1 – Measured move target/support @ 14875
Target 2 – 14589/14535 zone
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.