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Strong quarterly bearish signal should push EUR/NZD sharply lower

19 Aug 2017 Update

In my humble opinion the market mantra is morphing from ‘Growth Investing’ into ‘Chasing For Yield’ as I observe that the higher yielding currencies that have been battered down for so long appear to be ending their long term loosing streak and the market is fed up with negative yields such as those offered by the Swiss Franc or the Japanese Yen and to a lesser extent the US Dollar and the Euro.

The situation is more tricky concerning the EUR/NZD pair as the Kiwi is carrying a decent yield whereas the markets are betting on QE tampering in case of the Euro, which should bring renewed strength to the EZ currency.

The quarterly bearish M7/M23 crossover signal (red square) has not yet been negated and if it where it would be such a rare instance of it happening. Probably the fact the the volatility is not at its minimum and the price is navigating with wide swings between the boundaries of the volatility envelop combined with a positive MADC signal (blue square) could justify this situation.

Nevertheless I still believe the bearish scenario will be enacted as it is observed that the RSI line is still in bearish territory (below the red 50% line) and the trend is still neutral for the time being (red arrow).

On the contrary the price still has to confirm the bull case by demonstrating its willingness for a quarterly close above the moving average to target the upper boundary of the volatility envelop (1.72 EUR/NZD).

Therefore it is more important than ever to wait for the close of the quarterly period (by the last trading day of September) as a japanese candles Tweezers Top formation could take place on the price chart (below the red resitance line).

From an Elliot Waves perspective the bear scenario appears far from being complete.

Original Article Posted 2 Jul 2017

The EUR/NZD pair displays a strong bearish M7/M23 non-crossover on the quarterly scale.

The quarterly candle has a long top pin bar that demonstrates bearish action on price while the closing price is capped by a declining M7 moving average.

This set-up should draw the pair significantly lower in the coming quarters.

 

 

 

 

 

 

 

 

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