ForexYell

EURNZD Consolidation Favors Resumption Higher

FX:EURNZD   Euro Fx/New Zealand Dollar
200 0 2
EURNZD             DailyFX Analyst Pic

Bias: Bullish EURNZD             Tow I did that ard             Aug 24th High

Point to Establish Long Exposure: Pullback to Fib-Zone: 1.7575

Swing Target 1: 61.8% Fib Ext. & Aug. 24th High

Swing Target 2: 100% Fib Ext. 1.92538

Invalidation Level: 1.73504 Internal Level (Triangle Wave E of 4: Elliott Wave Based)

This Week’s Price Action Recap:

EURNZD             has failed to make any directional push over the last few weeks. After retracing from the August 24 route on euro             shorts and key belongs, EURNZD             has traced out a familiar trend consolidation pattern known as a barrier triangle. These patterns are famous for interrupting but not reversing the trend most of the time. Therefore, pullbacks above the key 1.7350 level could provide attractive risk reward to get long toward targets of 1.8527, the 61.8% fib extension off the triangle low of 1.7350 as well as a 100% fib extension within the rising channel at 1.9253.

This Week’s News Recap:

Last Week, Mario Draghi of the European Central Bank noted that continued quantitative easing may be a necessity given the inflation pressures. However if stress continues more trade value may be derived from this week’s RBNZ rate cut and subsequent press conference from Graham Wheeler. The RBNZ pleased the doves with their statement that accompanied the rate cut on September 10 leaving NZD vulnerable as more cuts potentially get priced in. Additionally, if the Federal Reserve fails to support the markets desire to belong USD on the September 17 FOMC rate announcement, money could flood back into the EUR in a manner similar to what we saw on August 24.
While a few dominoes would need to fall in the right order, the chart aligns with the potential fundamental developments to favor this pair resuming its strong uptrend.
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