EURNZD Selloff to Continue Below 1.6800

The multi-year uptrend for EURNZD looks to have run its course. In fact, the momentum began to slow in December of last year.

Here’s how things look from the weekly time frame:

Notice how the angle of the uptrend changed in late 2017. Instead of a parabolic move up, the EURNZD rally began to flatten.

We know that bull and bear flags are continuation patterns. They’re nothing more than channels that develop against the prevailing trend.

But what happens when a channel forms with the trend?

That signals a reversal, not a continuation. It’s a formation similar to a rising or falling wedge.

That’s exactly what has happened to EURNZD over the last ten months. It’s been a slow death, but the bullish momentum finally came to an end in October.

We’ve discussed the recent price action quite a bit in the member’s area.

For example, here’s the comment I made in the EURNZD member’s forum when the pair was 800 pips higher at 1.7520:

The first chart is EURAUD and the second is EURNZD. Both pairs have come under considerable pressure after forming almost identical topping patterns.

So where is EURNZD headed to next?

If sellers can break channel support at 1.6800 on a daily closing basis, it would open up downside targets including 1.6570 and 1.6150.

You’re going to need a New York close chart to determine where the pair closes at 5 pm EST. Go here to get access to the same platform I use.

The latter is the starting point of ascending channel support. When it comes to an upward sloping flag like this, the objective is usually the pattern’s inception point or 1.6150 in the case of EURNZD.

Now, keep in mind that the market is more than 300 pips below its mean. I use the 10 and 20 daily EMAs for this purpose.

Combine that with how volatile a cross like EURNZD can be, and you have a recipe for aggressive bounces along the way.

With that in mind, you don’t want to chase. If you aren’t already short, you’ll probably want to wait for a retracement into new resistance near 1.6800. Entering now would leave you too exposed in my opinion.

Stay patient and wait for the market to come to you. There are more than 500 pips between today’s price and the objective, so there’s no need to rush your entry.

Lastly, the daily close is key here. All of the above rests on the ability of sellers to clear 1.6800 on a daily closing basis.

Important: I use New York close charts so that each day closes at 5 pm EST.

Click here to get access to the same charts I use.