EUR/NZD Bullish Reversal After Bounce at Key -27.2% Fib Target

Tthe EUR/NZD has made a bullish bounce at the -27.2% Fibonacci target. Is this pair ready for a larger reversal after its 3,500 pip decline?

Price Charts and Technical Analysis

The EUR/NZD downtrend is not officially over yet. But there is a fair chance that a bearish ABC (purple) pattern has been completed at the most recent low.

1. A bullish breakout above the 21 ema zone and the resistance trend line (orange) confirms the bullish reversal (green arrow).
2. The first target is the 144 and 233 ema zone.
3. A bull flag pattern in this ema zone could indicate more upside.
4. A strong push up could confirm a wave 1 or A (pink).
5. A bearish break, however, below the -27.2% Fib target invalidates (red circle) the bullish reversal and indicates a continuation of the downtrend.

On the 4 hour chart, the bullish price swing seems to be a 5 wave pattern up (grey). This is probably a bullish wave 1 (grey – or a wave A).

1. The current pullback is choppy and corrective and could be a wave 2 (orange).
2. The wave 2 outlook remains valid as long as price action remains above the bottom and 100% Fib. A break below it invalidates it (red circle).
3. A deeper bearish pullback (red dotted arrows) is expected to test the Fibonacci retracement levels and bounce (blue arrows).
4. An immediate bullish breakout (green arrows) could indicate the end of wave 2 (orange) and the start of a wave 3 (orange).
5. A bull flag pattern (grey arrows) could indicate more upside after the break (green arrow).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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