3 Signals That Favor a EUR/NZD Breakout
- EUR Shows Surprising Resilience
- 3 Bullish Chart Signals That Favor EUR/NZD
- Major EUR/NZD Price Levels to Watch
While Eurozone growth concerns have dominated the headlines today, the euro (EUR) itself has, all things considered, held up rather well following the recent European Central Bank (ECB) rate cut. Now, EURNZD may provide an opportunity to fade some of the EUR bearishness out there, all while avoiding the vicious price action in EURUSD.
The technical set-up in EURNZD is actually quite appealing: a major descending wedge, a massive reversal candle off that descending wedge, and then a nice strong bounce off of the 50% Fibonacci retracement of the move from the bottom of that reversal candle all combine to suggest a breakout may be in the making on this pair.
Guest Commentary: The Case for a EUR/NZD Breakout
With NZDUSD looking vulnerable due to the large possible head-and-shoulders pattern forming, and the euro somehow remaining resilient, EURNZD seems poised to rally higher.
It is worth noting that EURNZD tends to rise during traditional risk-off periods, so a (long-overdue) correction in equities would also lend support to this trade idea.
The major levels to watch are the descending trend line, which comes in around 1.66, and the bottom of the wedge, which comes in at around 1.59. A breakout would target new highs above 1.7260.
By Liam McMahon, Currency Strategist, GlobalFxClub.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.