The EUR/NZD pair is one that has been in a strong downtrend for some time, but recently had seen a bit of a reprieve. Now that we are approaching a recent inflection point at the 1.6775 handle, the market is starting to form shooting stars. Ultimately, the fact that we continue to do this suggests that perhaps we are going to get a bit of a pullback. However, the analysis doesn’t end there as we have seen a couple of other things going on at the same time.
You can see that the 50-day EMA on the chart is starting to turn higher, and that of course is a bullish sign. Beyond that, we had broken above a downtrend line recently, and that of course is something that should be paid attention to. Quite frankly it should offer support on any type of significant pullback, assuming we even get to that level.
All things being equal it’s very likely that the 50-day EMA will attract certain amount of buying pressure. We obviously will have to pay attention to the EUR/USD pair as it is the barometer for Euro strength, but more than likely this is a market that’s due to pullback. If it does pullback then it should be thought of as value until the market breaks down below the psychologically important 1.65 handle, or the downtrend line as well, as both of them should offer interest on the upside.
To the upside, if we can break above the 1.68 level that should give more momentum to the buyers that are looking to push this market towards 1.70 level above. This market has recently formed something that could be thought of as a double bottom so the next couple of weeks are going to be crucial. However, it should be stated that the risk to reward potential is most certainly with the buyers at this point.