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 Looks to be a possible bullish descending wedge building here:
E/N monthly Cloud: price is below the Cloud though which is bearish:
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:
E/N weekly: below the Cloud so bearish still here too:
E/N daily: this time frame chart shows an extra bear trend line in play:
E/N daily Cloud: below the daily Cloud though too so bearish for now:
E/N 4hr: price is heading up to test the recent bear trend line:
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:
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.