Hi Traders! EURNZD short term forecast update and follow up is here. On March 14th 2023 I shared this “EURNZD Technical Analysis And Short Term 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 Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart, we have a bearish divergence that has formed between the first high which has formed at 1.73772 and the second high which has formed at 1.74007 based on the MACD indicator. The price then moved lower and broke below the last low at 1.72554 thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider this as evidence of bearish pressure. As per the book scenario after a bearish convergence, we may expect corrections and then a further continuation lower. Currently, it looks like a correction is happening. In addition to this, the ADX indicator gave a bearish signal here 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 another evidence of bearish pressure. Also, the price has also broken below the most recent uptrend line which we may consider as yet another evidence of bearish pressure. So everything looks good here for the bears and until the strong resistance zone (marked in red) shown in the image below holds my short-term view remains bearish here and I expect the price to move lower further.
Based on the above-mentioned analysis, on the H1 chart, my short term view was bearish and I was expecting the price to move lower further until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the bearish convergence and the breakout of the most recent uptrend line, the pullback that I was looking for happened and then the price moved lower further and delivered 330+ pips move to downside!
On the M15 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high formed at 1.72802 and the second high formed at 1.73047 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 and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further after that and provided an excellent move to the downside!
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
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