EUR/NZD traded lower on Monday, after it hit resistance slightly below the 1.6310 barrier, which is the upper bound of the sideways range that’s been containing the price action since October 19th. The lower bound stances at 1.6080. As long as the rate is trading between those two barriers, we will consider the short-term outlook to be neutral.
A decisive dip below 1.6080 would confirm a forthcoming lower low and signal the exit out of the aforementioned range. This may encourage the bears to push the action down to the psychological round figure of 1.6000, which is also marked by the low of August 17th, 2017, the break of which could carry larger bearish implications, perhaps setting the stage for declines towards the low of August 4th, 2017, at 1.5835.
Shifting attention to our short-term oscillators, we see that the RSI fell below 50, and now points down, while the MACD, already below its trigger line, just touched its toe below zero. Both indicators detect downside speed, but as we already noted, we prefer to wait for a dip below 1.6080 before we get confident on larger declines.
On the upside, we would like to see a rebound back above 1.6310, the upper end of the range, before we start examining whether the bulls have gained the upper hand. This will confirm a forthcoming higher high on the 4-hour chart and may pave the way towards the peak of October 18th, at 1.6450. If that level is not able to stop the advance, then a break higher could allow extensions towards the inside swing low of October 12th, at 1.6570.
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