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Important: I use New York close charts. Click Here to Use My Preferred Broker
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The EURNZD is in the process of testing former wedge support as new resistance. I mentioned the 1.6950 – 1.7000 resistance area last Wednesday and again over the weekend.
I know some of you entered last week. But if you notice, last week’s price action was all well below the 10 and 20 EMAs. In other words, prices were overextended which meant a retracement was likely.
That’s what we’ve been witnessing over the past 48 hours. The EURNZD is currently testing former wedge support as new resistance. As such, the validity of last week’s breakdown hangs on today’s close at 5 pm EST.
Remember, I use New York close charts. Everything that happens before the 5 pm EST session close is trivial.
So where might today’s rally find resistance?
There is a key horizontal level at 1.7100 that could prove problematic for buyers. Not only did this area attract a bid in late November and early December, but it’s also the 50% retracement from the current 2017 high to Monday’s low at 1.6743.
Whether or not the pair makes it that high on an intraday basis is still up in the air.
Keep in mind, however, that if the EURNZD closes today back above former wedge support near 1.7030, all bets for a move lower are off.
At the moment I’m just watching to see if we get some bearish price action at current levels. If we do, I will entertain an entry. If not, I’ll stand aside.
December is not a month for taking entries without some form of bullish or bearish price action. The lack of liquidity causes indecision and an increase in false breaks.
That’s why I tend to remain flat through the end of the year. And if I do trade, it’s with half-size or even quarter-size positions.
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