EUR/NZD has been trading in a consolidative manner yesterday and today, staying between the 200-EMA and the 1.7415 barrier. Overall, the pair seems to be trading within a descending triangle that’s been containing most of the price action since mid-September. Although, according to theory, such patterns tend to be bearish, we would adopt a neutral stance for now and wait for the rate’s escape before we start examining its forthcoming directional move.
In order to start looking to the downside, we would like to see, not only a break below the lower end of the triangle, at around 1.7325, but also a dip below 1.7295, a support marked by the lows of September 16th and 26th. Such a dip may initially pave the way towards the 1.7240 zone, defined by the inside swing high of September 11th, the break of which could carry extensions towards the 1.7175 hurdle, marked by an intraday swing high formed on the same day.
Taking a look at our short-term oscillators, we see that the RSI lies below 50, but points sideways, while the MACD lies slightly below zero, fractionally below its trigger line, but also moves east. Both oscillators suggest a lack of directional momentum, thereby supporting our choice to remain sidelined for now.
On the upside, a break above the triangle’s upper bound, as well as a move above 1.7480, may be needed for the bulls to take full charge. Such a break may allow them to aim for the 1.7545 zone, and if they don’t stop there, the recovery may continue towards the high of September 20th, at around 1.7615.
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