EURNZD broke above a recent swing high in spite of NZ Bank's raising of interest rates by 0.25 points.
I think there is an opportunity in the making. There might have been a lot of liquidity above the recent high. People are putting stop-orders in this area - whether the intention is to enter in the opposite direction or to exit their shorts. If it reverses now, there won't be a technical reason why Euro would rise further since the big money are expected to load their orders in this alleged liquidity-dense area.
Central Banks Rates are in the bottom: Black ~ EUR, Red ~ NZD
Further technical view dictates the importance of moving averages. Guess what, EURNZD has just approached its 5 EMA and bounced off around midday today (Central European Time).
To support my thesis correlatively, I chose Oil and Euronext 100 which both have high anti-correlation against this pair.
You can view both Oil and Euronext under the chart. Candles are colored as follows: Purple ~ anti-correlation, Yellow ~ correlation
The oil has produced two relatively big yellow candles for an anti-correlating asset. From this perspective, EURNZD has some catching up to do in the downward direction.
I guess the logic could be that the EU needs to be spending more money to buy oil and as a result, there is more in circulation. But correct me if I am wrong - I've adopted the relational analysis only recently and I write this with the hopes that someone will help improve via insightful comments/PMs.
With Euronext, and this I am not completely sure either, I think its that the cheaper currency means easier exports for European companies. But again, I was mostly a technical guy not so long ago. Anyway, from the technical perspective, it just bounced off its 50 EMA.
I will be watching the market closely tomorrow and at some point, I would like to enter a short if the market shows some follow-up (bearish engulfing on 1D or 1H).
Good luck!
I think there is an opportunity in the making. There might have been a lot of liquidity above the recent high. People are putting stop-orders in this area - whether the intention is to enter in the opposite direction or to exit their shorts. If it reverses now, there won't be a technical reason why Euro would rise further since the big money are expected to load their orders in this alleged liquidity-dense area.
Central Banks Rates are in the bottom: Black ~ EUR, Red ~ NZD
Further technical view dictates the importance of moving averages. Guess what, EURNZD has just approached its 5 EMA and bounced off around midday today (Central European Time).
To support my thesis correlatively, I chose Oil and Euronext 100 which both have high anti-correlation against this pair.
You can view both Oil and Euronext under the chart. Candles are colored as follows: Purple ~ anti-correlation, Yellow ~ correlation
The oil has produced two relatively big yellow candles for an anti-correlating asset. From this perspective, EURNZD has some catching up to do in the downward direction.
I guess the logic could be that the EU needs to be spending more money to buy oil and as a result, there is more in circulation. But correct me if I am wrong - I've adopted the relational analysis only recently and I write this with the hopes that someone will help improve via insightful comments/PMs.
With Euronext, and this I am not completely sure either, I think its that the cheaper currency means easier exports for European companies. But again, I was mostly a technical guy not so long ago. Anyway, from the technical perspective, it just bounced off its 50 EMA.
I will be watching the market closely tomorrow and at some point, I would like to enter a short if the market shows some follow-up (bearish engulfing on 1D or 1H).
Good luck!