The EURNZD has rallied sharply over the past two trading weeks as visible in this D1 chart. This currency pair is now trading at its horizontal resistance zone and the last four daily candlesticks formed hammers as well as inverted hammers which all point to a reversal. We expect this currency pair to correct back down to its horizontal support zone.
MACD indicates a gap between its histogram and moving average and we expect the gap to be closed over the next few trading sessions as momentum will fade and we could see a bearish centerline crossover. RSI is trading in overbought territory and is moving lower. A breakdown should further fuel the correction.
We recommend a short position at 1.6650 with a potential second entry point at 1.7000. We also recommend a stop buy order at 1.6850 with a take profit target of 1.7000 in order to hedge the first short position and before adding new positions to this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss order 1.6850. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.6150.
Here are the reasons why we call the EURNZD currency pair lower
- The EURNZD has rallied from it support zone and is now trading at its horizontal resistance zone
- The last four daily candlestick patterns formed hammers and inverted hammers at resistance which is a bearish sign
- MACD shows a gap between its histogram and moving average which we expect will be closed over the next few trading sessions
- RSI is trading in overbought territory and a breakdown should further fuel the correction
- Profit taking after a strong rally in order to realize trading profits
- New short positions by institutional swing traders
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