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EURNZD Capped by Support Turned Resistance

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The EURNZD is down 200 pips since confirming the head and shoulders reversal on January 5. I mentioned this pattern several times before it confirmed, including December 28.

We even discussed a bullish exhaustion pattern when the Euro cross was trading 550 pips higher at 1.7132. That formation broke down on the 12th of December.

I like to keep things simple. Most of what I do and teach boils down to basic technical analysis principles. For instance, a broken support level tends to become new resistance and vice versa.

If the market closes the day above a resistance level, it will likely begin to act as support. On the other hand, if it closes below a support level, it will start to serve as resistance.

Simple enough, right?

However, the key is having the patience to wait for a session to close. Because I use New York close charts, that means waiting until 5 pm EST.

One of the very first support levels I mentioned for the EURNZD was 1.6630. It served as resistance in August and September of last year and later attracted buyers in November.

Notice what has occurred over the last 48 hours. The 1.6630 handle attracted an influx of buying pressure on Tuesday, but Wednesday’s session closed well below it. Sellers have since defended the area as new resistance.

I even commented in the member’s area following Wednesday’s close that the 1.6630 area should begin serving as resistance. I’m sure a few traders became a bit nervous when they saw the EURNZD spike to 1.6668 on Thursday, but the level is holding on a daily closing basis.

That doesn’t mean the pair can’t go higher from here. The only sure thing in this business is that there are no guarantees.

But as long as 1.6630 holds as new resistance on a daily closing basis (5 pm EST), the next key support at 1.6350 is exposed. A close below that would pave the way toward the head and shoulders objective just below the September 2017 low at 1.6140.

On the flip side, a daily close above 1.6630 would open the door to the December 2017 low at 1.6750.

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EURNZD new resistance level on daily chart

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14 comments
Syer says

How about EURAUD Mr. Justin? Still downtrend? Thank you…

Reply
    Justin Bennett says

    See the latest weekly forecast. Not much has changed.

    Reply
Rodrick says

So are you saying as long it stay below 1.6630 on Friday close at 5pm

Reply
    Justin Bennett says

    I can’t explain it any better than this…

    “But as long as 1.6630 holds as new resistance on a daily closing basis (5 pm EST), the next key support at 1.6350 is exposed.”

    Reply
Veronica says

Your analysis are so helpful Justin… I have been following this EURNZD based on your analysis. Thank you.

Reply
Andrea says

Hi Justin
1.6630 is the 38% Fibonacci level and the price is also a bit far from the mean. Do you think it’s maybe better to wait for the price to retrace a bit more before to go short (always in case it closes below 1.6630 on daily basis)?

Reply
    Justin Bennett says

    Yes, but I didn’t say anything about going short.

    Reply
Suzan says

Its amazing how am able to look at your charts and analyses and be able to understand.Being struggling abit and i thought only indicators can help me out.I was very wrong.

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Darius says

Selling now at 1.66406 !

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jabir laasri says

Hola escribir probrama
Buenos dias
Tetouan marruecos

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STEPHANE says

merci beaucoup pour cet analyse

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Rokunda SA says

Justin thank you for teaching me to be patient with trades, I am profitable.

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Diana says

Justin,
YOu had a post about if this pair closes above I think 1.6860, then the bearish HS pattern will be negated. Today it just closed 10 pips above, but then it formed a gap down to 1.6860. What do you think – is the pattern negated?

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Haitham says

Haitham 0796550851

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