This forex pair recently busted out of its daily triangle consolidation pattern, hinting at the start of a long-term trend.
Is the rally fading or is this merely a retest?
Take a look at these inflection points on the long-term chart!
EUR/NZD Daily Forex Chart by TradingView
After consolidating inside a descending triangle formation for almost a year already, EUR/NZD busted through the resistance last month to hint that a longer-term uptrend may be in the cards.
However, the pair hit another major roadblock around the 1.8640 mark, forcing euro bulls to retreat from their charge.
Is this merely a pullback from the ongoing climb or are we seeing the start of a reversal?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the New Zealand dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The 100 SMA is above the 200 SMA, suggesting that buyers have the upper hand and that support levels are more likely to hold than to break. Price is already testing the 50% Fibonacci retracement level near the 1.8000 major psychological level but might be in for a larger correction to the 61.8% Fib closer to the former triangle top.
If any of these Fibs keep losses in check and bullish behavioral patterns emerge, the pair could set its sights back on the August highs near R1 (1.8570) and beyond.
A move back inside the triangle, on the other hand, could draw in more technical sellers and take EUR/NZD down to the next support zone at S1 (1.7700) or even back to the triangle support at the 1.7500 major psychological level.
Whichever way you decide to play this setup, make sure you practice proper risk management and keep an eye out for major market catalysts coming up!
