- EURNZD testing initial resistance- Well-defined monthly opening range in view
- Updated targets & invalidation levels
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Technical Outlook:EURNZD turned from slope support extending off the September low earlier this month on building divergence, shifting our focus higher in the pair. This recent pullback has rebounded off key near-term support and if we close at these levels, would constituted an outside-day reversal- bullish. Keep in mind that we've simply set an objective monthly opening-range & ultimately a breach above the January reversal day close at 1.4876 is needed to validate the broader reversal higher.
Notes:A closer look at price action has the pair trading within the confines of a well-defined ascending pitchfork formation extending off the January / February lows. Note the strong response to key confluence support yesterday at 1.4660 where the 61.8% retracement of the advance converged on the lower median-line parallel and former channel resistance.
The rebound is now resting resistance at 1.4784 and while we're likely to get some pull-back from here, the focus remains higher while above the lower parallel / December low at 1.4692. A topside breach targets the weekly range highs at 1.4827 & the median-line / 1.4876. Subsequent resistance objectives at 1.4908, 1.4953 & 1.4996-1.5002.
A quarter of the daily average true range (ATR) yields profit targets of 30-33 pips per scalp. Added caution is warranted heading into the release of the 4Q New Zealand retail sales data today with the print likely to fuel increased volatility in the Kiwi crosses. From a trading standpoint I would be looking for a pullback here to offer long-entries while in this formation with a breach above the median-line (uptrend resistance) needed to suggest a more significant low is in place.
Relevant Data Releases
Other Setups in Play:
- AUD/USD Eyeing Topside Targets Ahead of Aussie Jobs Report
- USD/JPY Clears Monthly Range, Trendline Resistance Ahead of U.S. CPI
- EUR/GBP Approaching Key Support Targets – 8400 in Focus Ahead UK CPI
- Weekly Strategy Webinar: USD Rebound Hinges on Yellen Testimony
---Written by Michael Boutros, Currency Strategist with DailyFX