EUR/NZD Carves Double Top Formation into Resistance
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- EURNZD threatens double top breakdown with a break below 1.7124
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Technical Outlook: EURNZD has been trading within the confines of a broad ascending pitchfork formation extending off the 2016 / 2017 swing lows with price reversing off parallel resistance this month. As it stands now, the pair is poised to post and outside week reversal candle off resistance (bearish) with a break of the recent lows risking a double top breakdown targeting 1.6881-1.6930. Note that ongoing momentum divergence further highlights this threat and although the broader focus remains higher, the near-term risk is for a correction lower.
EUR/NZD 240min Chart
Notes: A closer look at price action highlights near-term confluence support here at 1.7124 with a break / close below this threshold needed to validate a double top breakdown. Such a scenario targets initial support objectives at the monthly open at 1.7009 backed by the 61.8% retracement at 1.6923 and the measured move into 1.6881. Note that the median line also converges on this threshold heading into the close of the month (area of interest for possible exhaustion / long entries).
Bottom line: I’ll favor fading strength while below the weekly open at 1.7332 with a breach above 1.7409 needed to validate resumption of the broader up-trend. Ultimately, a move lower towards structural support would offer more favorable long-entries. Keep in mind we have the release of key Eurozone inflation and employment data on tap this Thursday.
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- Written by Michael Boutros, Currency Strategist with DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.