EUR/NZD Testing 38.2%-50% Fibonacci Resistance On Daily And 1H Charts

• EUR/NZD is building a bullish corrective pattern. The bear flag pattern usually indicates a downtrend continuation.
• Today’s analysis analyses the EUR/NZD on the daily chart and 1 hour as we examine potential short trade setups.
• The EUR/NZD bearish price swing is expected to be a wave 3 (pink). The pullback seems to be an ABC (pink) correction in wave 4 (grey).

Price charts and technical analysis

The EUR/NZD seems to be in a strong downtrend. The bearish price swing is expected to be a wave 3 (pink):

1. The pullback seems to be an ABC (pink) correction in wave 4 (grey).
2. The second breakout below the 21 ema zone could indicate the end of the wave 4 (grey) pullback.
3. A break (orange arrow) below the support trend line (green) would be the next confirmation.
4. A deeper pullback to the 50% Fibonacci level is expected to act as resistance and a potential reversal.
5. A break above the 50% Fib places this wave outlook on hold (orange circle) or invalidates it (red circle).
6. The main bearish targets are located at the round levels of 1.6250, 1.60, and the -27.2% Fib target at 1.5860.

On the 1 hour chart, price action seems to be preparing for a bearish breakout but the wave 4 (grey) could extend into a triangle pattern:

1. Price action could have completed a bullish ABC (orange) in wave 4 (grey).
2. But the wave 4 could also extend sideways via a larger ABC.
3. A bullish break above the 50% places the bearish outlook on hold (orange circle) or invalidates it (red circle).
4. A bearish breakout (orange arrow) could indicate a downtrend continuation. But a break of the bottom is needed as well later on.