New Zealand Dollar Kicks Off New Week On The Back Foot

Monday starts with a slight optimism on the major exchanges but it's hard to call it a game-changer as the volatility is rather low and we can sense a holiday mood on the trading floors. Worry not, in this environment we were still able to find three interesting trading setups, which you may find very interesting.

First one is a small update about the AUD/NZD, which we mentioned a few times at the beginning of the month. Back then, the price was testing crucial resistance on 1.085. Price was trying to close a day above that level since September 2019. In our previous analysis, we said that price closing a day above that resistance will be a legitimate buy signal. And it did! Since that time, we got 8 bullish days in a row and price is currently 180 pips higher, what a move! With this, the long-term sentiment is definitely positive but a chance for a short-term bearish correction is rising.

As for the NZD, we do have a very negative situation on the NZD/JPY, where we broke the lower line of the rectangle, which gave us a proper sell signal. Now, we are testing the neckline as we do have a proper head and shoulders formation. Price closing a day below the neckline will be a super strong sell signal, especially when we will consider a weekly chart and the shooting start candlestick bouncing from the long-term downtrend line.

Last but not least is the EUR/PLN, which is on the verge of breaking crucial horizontal support – 4,4. In the shorter-term, the price created a rectangle pattern and Monday starts with an attack on its lower line. First attack seems unsuccessful and it actually opens a way up north based on the possibility of a false breakout pattern. One is certain here. We are getting closer and closer to a final decision, sharp breakout and a slide or a bounce