EUR/NZD Testing 38.2%-50% Fibonacci Resistance on Daily and 1H Charts

The EUR/NZD is building a bullish corrective pattern. The bear flag pattern usually indicates a downtrend continuation.

Today’s analysis analyses the EUR/NZD on the daily chart and 1 hour as we examine potential short trade setups.

Price Charts and Technical Analysis

EUR/NZD 31.5.2021 daily chart

The EUR/NZD seems to be in a strong downtrend. The bearish price swing is expected to be a wave 3 (pink):

  1. The pullback seems to be an ABC (pink) correction in wave 4 (grey).
  2. The second breakout below the 21 ema zone could indicate the end of the wave 4 (grey) pullback.
  3. A break (orange arrow) below the support trend line (green) would be the next confirmation.
  4. A deeper pullback to the 50% Fibonacci level is expected to act as resistance and a potential reversal.
  5. A break above the 50% Fib places this wave outlook on hold (orange circle) or invalidates it (red circle).
  6. The main bearish targets are located at the round levels of 1.6250, 1.60, and the -27.2% Fib target at 1.5860.

On the 1 hour chart, price action seems to be preparing for a bearish breakout but the wave 4 (grey) could extend into a triangle pattern:

  1. Price action could have completed a bullish ABC (orange) in wave 4 (grey).
  2. But the wave 4 could also extend sideways via a larger ABC.
  3. A bullish break above the 50% places the bearish outlook on hold (orange circle) or invalidates it (red circle).
  4. A bearish breakout (orange arrow) could indicate a downtrend continuation. But a break of the bottom is needed as well later on.

EUR/NZD 31.5.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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