Double Top sending the price towards the South
|EURNZD produced a Double Top on the daily chart. Since then the price has been bearish. The price after breaching the neckline had a consolidation around the breakout level. Today's price action suggests that the price may head towards the South again with good selling pressure.
Let us have a look at the EURNZD daily chart.
Chart 1 EURNZD Daily Chart
The chart shows that the price had rejection twice at the level of 1.7580. Then, the bearish journey began with a daily bearish engulfing candle. A bearish engulfing candle at a double top's resistance attracted the buyers and we see the consequence. One of the daily candles breached the neckline level which the sellers must have been eagerly waiting for taking more short entries. After the daily breakout, the pair did not make any downside breakout on significant intraday charts which might have pushed the price towards the downside. It rather had a consolidation. The sellers must have waited for a good-looking bearish daily candle right from that breakout level. Today's price action suggests that their waiting may get over if today's candle closes below the resistance level of the consolidation zone. The way it has been going so far, it is very likely that today's candle is going to close as a strong commanding bearish daily candle. A strong bearish daily candle shall attract more sellers tomorrow to go short on the pair.
Let us now have a look at the H4 chart.
Chart 2 EURNZD H4 Chart
The H4 chart shows that the pair had a correction. It broke the lowest low of the wave earlier today. However, one of the H4 candles (one with long spike) engulfed all of today's H4 candles. That might have wiped off many intraday traders' stop losses. Since the candle closes below today's lowest low, we may get more bearish movement on the H4 chart. This will make the daily candle be a strong bearish candle at the end of today's trading day.
The EURO had two high impact news events called "Monetary Policy Statement" and "Main Refinancing Rate" at GMT 12.45. That massive bearish candle with a long upper shadow is the consequence of those two news events. There is another high impact news event called "ECB Press Conference" at GMT 13.30. The press conference will be held on declared monetary policy. Most probably it would not create as much volatility as the main event had created earlier. It usually does not create more volatility than the main event, but if it does, it could create extreme volatility in the market.
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