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EURNZD: Further Losses Likely Below 1.5840

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Aside from the sheer volatility that last week’s EU referendum caused, it did something much more meaningful and helpful for the traders who remained patient.

The aftermath of the event revealed where the real opportunities lie. It shed light on markets that had made false breaks ahead of the vote and at the same time offered follow through to others.

Take Thursday’s GBPUSD close above 1.4740 as one example of a false break. Another example would be NZDUSD closing above the 0.7180 area just hours before the panic selling began, which triggered a 330 pip landslide.

Alternatively, we have a pair like EURNZD where post-Brexit fears offered a high degree of follow through to the break that occurred on Tuesday of last week.

Which break am I referring to, exactly?

The daily close below the 1.5840 handle. I mentioned this area in the weekly forecast from two weeks ago. Unfortunately for us, the move below critical support came just 48 hours ahead of last Thursday’s vote on whether the UK would leave the European Union, making it unwise to take on Euro exposure beforehand.

On top of that, the 1.5840 level was retested as new resistance in the midst of the chaos that consumed the final 24 hours of trade last week, which was hardly an environment conducive to trading.

But with a new week comes fresh opportunity. The markets have had some time to settle into their new positions, making it a less risky endeavor to trade currencies like the Euro or even British pound.

To be clear, I am by no means implying that it will be smooth sailing from here. An event as momentous as last week’s Brexit is sure to send shockwaves throughout the financial markets for weeks and months to come.

With this in mind, correctly timed entries and scaling risk accordingly are of the utmost importance. And with the right amount of diligence, I believe the latter half of 2016 could offer some of the best opportunities since the first four weeks of the year.

As for EURNZD, today’s consolidation is a hint that further losses are likely toward 1.5400 with a break below that targeting 1.50.

But again, to not only survive these volatile conditions but to prosper requires saint-like patience and an obsessive attention to risk control.

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EURNZD break below key support level

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