EUR/NZD: one cross-pair of interest.

At times when the US$ is choppy it often pays to look at FX cross pairs for trading opportunities. One pair I have been exploring off shorter time frame charts recently is the EUR/NZD. This post looks at the bigger picture with this pair as I always keep that in mind, even when trading off shorter time frames. The monthly, weekly, daily and 4hr standard and Ichimoku charts are reviewed here.

E/N monthly: I can’t help adding trend lines ūüôā ¬†Looks to be a possible bullish descending wedge building here:

ENmonthly

E/N monthly Cloud: price is below the Cloud though which is bearish:

ENmonthlyCloud

E/N weekly: in a downtrend but price has bounced up off trend line support. This is the third touch of this major trend line:

ENweekly

E/N weekly: below the Cloud so bearish still here too:

ENweeklyCloud

E/N daily: this time frame chart shows an extra bear trend line in play:

ENdaily

E/N daily Cloud: below the daily Cloud though too so bearish for now:

ENdailyCloud

E/N 4hr: price is heading up to test the recent bear trend line:

EN4hr

E/N 4hr Cloud: note how price is back up in the 4hr Cloud. Any break and hold back above this Cloud would tie in with a break of the daily bear trend line seen in the charts above. This is worth keeping an eye on because, IF these breaks were to evolve, it could be an early indication that a change in trend is building:

EN4hrCloud

Summary: I always assess the higher time frame charts, even if ultimately drilling down to the 30 min time frame. Traders need to understand the general, overall picture of any trend and, also, to be on the lookout for any possible directional change.

The EUR/NZD has been in a lengthy down trend. This downtrend may well continue but the charts above reveal a few warning signals that suggest this trend could be turning or at least pausing. These signals include:

  • a bounce up off a monthly support trend line,
  • the bullish descending wedge
  • the negotiation of the 4hr Cloud
  • the negotiation of a recent daily-chart bear trend line.

Any close and hold above the daily bear trend line would have me looking for new LONG signals on all time frames BUT a respect of this trend line (and the 4hr Cloud) would suggest this move might just be a bounce within an overall bearish move.

2 thoughts on “EUR/NZD: one cross-pair of interest.

  1. Hi Mary!
    Thanks for the write up on that. Yes, it is interesting. (EUR/NZD)
    I look at the big picture also, like you.
    But, can we take it a bit further? I wonder if we can surmise what else is going on.
    See, I look at it this way. We do have the Majors against the Comms. (USD,EUR,GBP,CHF,JPY = Majors) (AUD,NZD,CAD = Comms) They are on opposite sides. (I have kept track of each of them on a daily basis since over a year now)
    The EUR is a Major. And you must have the USD in mind with them.
    The NZD is a Comm. And you must have the AUD in mind with them also.
    The carry trade has favored the Comms lately.
    So, the slant has GENERALLY been favoring the Comms for some time now. Sure, the USD has been strong, but pretty much has been the only strong Major.
    I just wonder, given the possible turn around from the EUR, if the Comms will generally depreciate over time.
    Is this the after affects of the oil turn around? (CAD)
    We do know that both AUD, NZD central banks want a lower exchange rate. They both have been crying for that for some time now.
    IF we do see a change in the BROAD trend of things between these two, I do think there’s something changing in the big picture. The EUR is big enough to make world wide changes. All we need is the EUR to meet up with the USD. And if we have the GBP join them also, that would be enough to take out all the Comms.
    But on the other hand, maybe this is just nothing but a big correction, and the trend will eventually continue.
    And all my thinking about it is meaningless.

    Any thoughts on this type of thinking? The real big picture?

    Thanks for listening Mary.

    Mike

    • Hi Mike,

      Thanks for posting your thoughts and, yes, your summary seems pretty spot on.

      The next currency chapter? Who knows BUT maybe there will be some other players enter the arena to join the big boys….the Chinese Yuan, the Indonesian Rupiah or maybe even something else???

      The population of Indonesia is over 250 million and of China is over 1.36 billion. The USA is just 320 million, Europe about 750 million and Australia just 23 million.

      The impact of the growing middle class in Indonesia and China is yet to be realised but the new Asian Development Bank may add spice to this currency debate. If this new bank were to create its own currency, as per the Euro/ECB in Europe, then based on sheer population you’d have to think it might cut some sway and rival some of the current majors!

      As they say…expect the unexpected!

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