I’m spotting a head and shoulders pattern on the 4-hour chart, with price now testing the neckline support.
Keep an eye on a potential breakdown if it occurs – this could signal a significant trend reversal!
EUR/NZD 4-Hour Chart Analysis
The EUR/NZD has been dragged lower by dovish ECB rhetoric in recent weeks, with the pair now testing its head and shoulders neckline support. While risk aversion from the Russia-Ukraine conflict has limited the Kiwi’s upside, it hasn’t been enough to offset the Euro’s recent weakness.
Looking ahead, the upcoming Eurozone PMI releases could shift focus back to economic drivers. Market expectations are for slight improvements in manufacturing and services, but weaker-than-expected results could increase the chances of another ECB rate cut, which would likely lead to a break below the neckline support at 1.7860 (S1). If this happens, we could see a selloff of roughly 300 pips, the size of the head and shoulders pattern.
On the other hand, if the support holds, EUR/NZD could target resistance zones around 1.8050 (R1) and 1.8130 (R2). The 100 SMA is still above the 200 SMA, signaling bullish pressure, though the narrowing gap between them suggests a potential bearish crossover.
Keep an eye on upcoming economic catalysts and practice proper position sizing when trading!
