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    EURNZD: 1.6544 is a pivotal level

    Technically, whilst remaining above key support, the potential is for a bullish flag to play out. However when we look at catalysts for the week then we have to be on guard for a bullish or bearish move around the 0.6540 support area. 

    NZ Business PMI on Wednesday: Previously at 56.7 it has softened since the November read but still relatively high when compared to global standards recently. New Orders component is at its highest since Feb '15 and production it’s highest since September, so chances are we won’t see any drastic moves to the downside. Additionally RBNZ still have a relatively bullish outlook for the economy and expect inflation to pick up, so this index does run the risk of coming in higher and putting pressure onto EURUNZD. 

    Q4 GDP for Eurozone is out on Friday: This data set could put more pressure on the Euro than Draghi has managed to recently, if it comes in or below the 0% expected. The Euro has witnessed two notable bullish rallies from the multi-year lows. In December ECB cut interest rates further into negative territory and expanded its QE program but the market responded with EURUSD gaining 3% as they were positioned for more action than was delivered. Then last week Draghi provided stronger clues for more stimulus in March, only to send the Euro to a 15-week high. That said, if GDP surprises to the upside (by hitting 0.1% or more) then this should help support the Euro and potentially send EURNZD higher. ​

    1.6544 is a pivotal level: Price is currently support above the short-medium term moving averages, the monthly pivot point and 1.6544 support. We could consider buy setups above this level to play the bullish flag setup and target the cluster of resistance levels around 1.727 and 1.80. However if we are to break below this key level then we can assume the setup is invalidated and target a bearish run to the 1.57973 swing low. 

    These resistance zone comprise of swing highs, pivot points and Fibonacci levels. I particularly like how 1.80 coincides with the 100% projection and monthly s1, whilst the 61.8% falls around the monthly S1 and Jan '16 swing high. 

    Technically I prefer the bullish flag setup but we do need to remain above 1.6540 support zone for this to play out. However we may also be witnessing a triangle formation which could break to the downside to confirm a top. Whilst triangles are usually considered to be continuation patterns we can also find them to be counter-trend patterns. 

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