Hi Traders! EURNZD forecast follow up and update is here. On July 6th I shared this “Technical Analysis – EURNZD Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 1.69304 and the second high that has formed at 1.69667 based on the MACD indicator. The price then moved lower and broke below the last low at 1.66642 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction is happening. In addition to this, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. Until the strong resistance zone (marked in red) holds my view remains bearish here and I expect the price to move lower further after pullbacks.
EURNZD H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis my view was bearish here and I was expecting the price to move lower further until the strong resistance zone holds. The price moved as per the plan here, after the bearish convergence we had a small pullback and then the price moved lower further delivering 350+ pips move!
On the M15 chart, the market provided us with various facts supporting the bearish view. The H4 chart pullback happened in the form of an ABCD pattern on the M15 chart, with the price creating a continuing bearish divergence between the first high that has formed at 1.66537 and the second high that has formed at 1.66630 based on the MACD indicator. The price then moved lower, and broke below the most recent uptrend line, we may consider these as facts provided by the market supporting the bearish view. Also, there were no signs opposing this bearish view. The price then moved lower further and provided an excellent move to the downside as you can see in the image below.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions accordingly.
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Arvinth Akash
Traders Academy Club Team.
