The EUR/NZD pair tried to rally during the session on Thursday, but the Euro got beat down against the New Zealand dollar, as it was against most other currencies. After all, the European Central Bank stated that they are uncomfortable with the high valuation of the Euro, and while they don’t necessarily say they are going to do anything right now, they did not rule out intervention in June. With that being the case, and the fact that the Euro has been in a downtrend against the New Zealand dollar, this game is plenty of fuel to fall during the session.
On top of that, you can see that the 1.61 level has been a “flip zone”, making the area above support and resistance, and a place that the market tends to pay a lot of attention to. The resulting candle was a massive shooting star, and a break below the bottom of that shooting star should send this market lower. It should be noted that the shooting star stopped right at the 1.60 handle, which of course is a large, round, psychologically significant number and therefore should attract a lot of attention.
Possible bearish flag?
Looking at this chart, you can see that there is a potential bearish flag, and that of course is very bearish. It suggests that we could fall as much as 800 pips, and the breakdown would lead us to the 1.52 level. I believe that certainly could happen, and adding more credence to that idea is the fact that we are finding the 50 day exponential moving average as resistance at this obvious support and resistance level as well.
The last “nail in the coffin” as far as I see is if we break below the hammer from a couple of sessions ago. That would be a breakout of significant support, and at that point in time I believe that this market really could pick up momentum to the downside. In that particular scenario, why couldn’t we get to the 1.52 handle at that point?
