EURNZD Technical Trading Strategy: Call the Bulls

EURNZD Technical Analysis

Following moderate losses, EURNZD has painted a reversed Head-And-Shoulders on the daily chart. It is important to highlight the reversal pattern is incomplete, however, part of our buy-on-dips strategies in the Forex market is to enter the trade before the completion of the right-hand shoulder.

The greatest risk to the Euro-Kiwi is the upcoming monetary policy decision where the market calls the Reserve Bank of New Zealand I(RBNZ) to hike rates by 25bps (0.25%).

EURNZD Daily Chart

Click on the chart to enlarge:

EURNZD Technical Analysis 23 July 2014

EURNZD Daily Chart

We are closely monitoring Fonterra’s activity in New Zealand and the RBNZ activities in the past. We have concluded that although a direct FX intervention is NZD pairs and crosses is possible (as the central bank intervened in the past),  immediate risk will be on the rate statement. We would expect traders to minimize their NZD exposure in the US session, ahead of the scheduled monetary policy, which correlates to our technical analysis for the currency.

We are fully aware that we will incur negative swap for selling the Kiwi but we expect EURNZD volatile characteristics to compensate. We will be updating EURNZD trade alert throughout the day so ensure to regularly visit this page  for any trade updates, which will show at the bottom.

You may review all our trade alerts in ‘Trades Performance.’

EURNZD Trade Details

Long @ market price
Take profit: 1.5675
Protective stop: 1.5444
Estimated duration: 12 hours
Risk Ratio (RR): 1 : 2.5 (approx.)

23/07/14 UPDATE: EURNZD punches higher, trading at 1.5518 at the time of this writing. We are closing 15% of the trade at market price.

23/07/14 UPDATE II: Although we still expect EURNZD to recover, we must respond to recent weakness. We are closing 10% of the long trade with a loss at current price (1.5470) ahead of the RBNZ monetary policy.

24/07/14 UPDATE: We are closing 70% of the trade at market price (1.5590) following the spike in EURNZD and shift the protective stop to 1.5545.

24/07/14 UPDATE II : We have exited our long trade in EURNZD at market price (1.5625) with a decent profit.