EURNZD halted its impressive rally at a 15-month high of 1.7357 on Friday and near the top line of the upward-sloping channel, which has been navigating the market since the slide to a three year low of 1.6061 in late November.
A downside correction or some consolidation would be normal at the current stage of the bullish wave, though how brutal any pullback could be is still in question since the RSI and the Stochastics, although in overbought territory, have yet to show any convincing weakness, while the MACD is still preserving its positive momentum well above its zero and signal lines.
Nevertheless, unless the pair resumes its neutral trajectory below the 2021 resistance of 1.7160, any declines could barely attract attention. A drop beneath the 20-day simple moving average (SMA) and the channel both seen around 1.6875 could be a stronger bearish signal, especially if a plunge below the 200-day SMA and towards the 1.6557 follows that action. Note that the broken resistance trendline stretched from August 2020 is also passing through this region.
On the other hand, if the rally gears above the channel’s upper boundary and the 1.7400 level, the next obstacle could pop up near the 1.7530 restrictive area, last seen in the second half of 2020. Beyond the latter, buying pressures could intensify towards the 1.7755 hurdle.
In summary, EURNZD could give up some ground in the near term after touching the surface of the bullish channel. However, such an action may not raise any concerns unless the price falls back below 1.7160.