EURNZD Longer Term Daily Short, 3.22 Risk to Reward

OANDA:EURNZD   Euro / New Zealand Dollar
Hi everyone,

EURNZD has confirmed a shark harmonic pattern on the daily timeframe .

The potential reversal zone (PRZ) is comprised of two ratios:
0.886 OB retracement, 1.71275,
1.618 AB projection, 1.70611.

Stop loss is set at 1.13 0B projection, or 1.73566.
Take profit is set at two levels, management and final.
The management level is the 0.5 BC retracement, or 1.67133.
The final level is the 0.886 BC retracement, or 1.63928.

The overall risk to reward ratio for this trade is 3.22.

The terminal price bar has already formed, confirming the PRZ. As of now, it seems like it could form a bearish engulfing pattern on the 1D. Also, RSI has reached overbought territory on the 1D timeframe, which looking at past price, often indicates a coming price swing.

Other indicators that are calling for a sell are the 5 and 20 EMA's. On the 4H, the 5 EMA has also crossed below the 20 EMA , which could indicate a change in trend to come.

Also, the volume is important here too. Looking at the 4H, we have a spike in buying volume as the terminal price bar formed, which could indicate the exhaustion of buyers.

In terms of fundamentals though, it's a little murkier. The Eurozone is struggling a lot with weakened demand and a generally weaker economy, with nation's such as Germany seeing exports in automobiles and other goods falling due to various factors such as the trade war. This is indicated by the negative consumer confidence at -7.9 currently. On the other hand, the NZD is a currency heavily correlated with the AUD, which has been seen falling to new lows. This means that while I normally like to pair strong and weak fundamentally, in this case, an argument can be made that both currencies are depreciating consistently. This makes the coming Eurozone Consumer Confidence report especially important, as a figure below the estimated -7.6 can definitely push the EURNZD down.

As always, watch price action first to confirm a move before entering! Looking at the minor timeframe of the 4H so far, we can see price rejecting the PRZ once it confirmed the 0.886, with the ratio having been tested twice, both times followed by a bearish engulfing pattern.

Thanks for reading,
Trade active: European Consumer Confidence in at -6.5, a lot better than the -7.7 expected. However, just looking at price action in the past 35 minutes, there hasn't been any sort of violent move in either direction. This indicates that the report may have already have been priced in, or the overall negative sentiment is still not going to push EUR higher against NZD regardless. I'm still in the position, but remaining watchful on price action to follow now.
Trade active: A bit late of an update here but TP1 reached.


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