Tomasz Wisniewski
Axiory Global Ltd.
Week ago we were writing about the EURNZD, where the price created a nice head and shoulder pattern. Before that, the pair broke the mid-term up trendline (red), so we had strong grounds to be bearish here, especially that the neckline of the H&S pattern mentioned above was breached too. On 11.01 we wrote that:
“As you can see, the technical analysis favours bears and promotes the scenario, where the price should test the 38,2% Fibonacci soon. That makes it a decent mid-term trading opportunity with a potential for 280 pips movement. Sell signal will be denied, once the price will come back above the 23,6% which for now is less likely to happen.”
Back in that time, we were around the 1.6622 and straight after our analysis, the price declined 100 pips more, so indeed, that was a decent mid-term trading opportunity. Unfortunately that was it. We did not make the 280 drop anticipated by us and the price reversed sharply. What is more, we came back above the 23,6%, which as mentioned, denied the sell signal on this instrument.
What is the situation now? We can say that all that drop that happened after the neckline was broken, was the false breakout (blue). That is actually a great occasion to open the opposite position,so to go long. We are now back above the neckline and the 23,6% Fibonacci. In addition to that, recent downswing can be locked inside of the wedge pattern (bullish trend continuation pattern), where the upper line of it was already broken (purple). That strengthens the buy signal here. Sentiment is positive as long as we hold above the 23,6%.
Follow us on Twitter @wisniewskifx and @AlpariRA
Trading FX/CFDs on margin bears a high level of risk, and may not be suitable for all investors. Before deciding to trade FX/CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. You can sustain significant loss.
Recommended Content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
USD/JPY climbs relentlessly ahead of BoJ meeting
The USD/JPY extends its uptrend despite verbal intervention from the Minister of Finance. The wide differential between US and Japanese interest rates is seen as a major factor contributing to the rise. The idea that a lot is already priced into the US Dollar could limit USD/JPY upside.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.