Over the weekend I mentioned the potential EURNZD lower high that formed between January and February of this year. I also mentioned the 1.6580 handle that would likely act as resistance if tested again this week.
Sure enough, the pair found selling pressure at this level during Monday’s session and now finds itself 200 pips lower as a result. However, the bears aren’t out of the woods just yet. The trend line that extends off the April 2015 low could attract a bid for a third time as it did on February 26th.
That said, the fact that the pair has put so much pressure on this area of late indicates that a break lower may be on the horizon. A close below trend line support is where, in my opinion, a favorable opportunity could materialize over the coming sessions.
A daily close below this level would expose the two December lows at 1.5840, giving traders just over 400 pips to work with. We’ll see how the next few sessions play out, but this is certainly one to keep an eye on.