EUR/NZD ended up testing briefly below the highlighted October low (1.5470) as well as the bottom of the Ichimoku Cloud (1.5435), but then found support just ahead of the key 61.8% retracement (blue) around 1.5390/95. As previously noted, the pair did end up bouncing, but has since recovered by more than originally anticipated (citing the 100-day sma). Currently, EUR/NZD has found difficulty into the 61.8% retracement (grey) as well as the 144-day ema near 1.5800/10 and it also sees additional resistance, the top of the daily Ichimoku Cloud, just above at 1.5820/25. Even the 200-day sma could come into play near 1.5865/70 over the coming sessions (not shown). Furthermore, EUR/NZD appears to have made a clear 5-wave impulse move lower from the October 17th high, which from an Elliot Wave perspective suggests the recovery here in the month of November is merely a correction and even if this is not wave-2 up (black), then the next best alternative count would label this wave-B up, followed by another 5-wave move lower in C.
Additionally, daily RSI’s break below the key 40/45 level at the turn of the month suggests the pair is unlikely in a bull market. Ideally, if this is indeed a correction, then RSI’s trendline resistance should hold – Interestingly, this also resides around the key 60/65 level which is often resistance while in a bearish environment. Lastly, while the 13-day sma did provide EUR/NZD with support earlier this week, the fact that it still remains well below the daily 144 & 169 EMA’s suggests the recent advance is likely to terminate in the not too distant future – That said, should price move adversely against us, we would be wrong upon a break above the October high near 1.6055/60.
Chart Source: Forex Charts by eSignal
