By: Mike Kulej
After what had seemed like an eternal bear market, the EUR-NZD appears to have found a bottom late last year. From the low of 1.6926, this pair has rallied to the recent high of 1.9569. This is the largest price run up in over two years and could be the start of a long-term bull market.
For now, however, the EUR-NZD is likely overbought from the short-term perspective. The 2600 pips rally happened very quickly and with hardly a correction, so a pull back here would not be out of line, especially since the technicals confirm such possibility.
The indicators are either overextended, at high readings, as the MACD is, or in overbought zones, similar to what the RSI is showing. In addition, the price keeps touching the upper limits of the Bollinger Bands, yet another bearish sign.
Perhaps most telling are the daily candlesticks, though. There is a potential reversal patter forming, with a hanging man in the center. If a large bearish line follows this on Friday, probabilities for a correction will increase dramatically. The most likely short-term pull back objective for the EUR-NZD is the 1.8700 level, where the price experienced a resistance in the past and, more recently, a minor support.