FxWirePro: EUR/NZD Minor Trend in Symmetric Triangle, Major Trend in Ascending Channel – Trade Tunnel Spread and Long Hedge

The minor trend of EURNZD has been little edgy, the pair has been forming symmetric triangle pattern (refer daily chart).

Where bullish engulfing candle has occurred at triangle baseline, consequently, the rebound from lows of 1.6516 levels is reasonable and that has taken-off rallies above DMAs.

On the contrary, shooting stars pop-up at triangle resistance, the upswings have failed at triangle resistance. Consequently, bears have resumed and could extend further southwards up to 1.6696 levels (i.e. 7-DMAs). 

While both technical indicators (momentum and trend oscillators) are in tandem with the minor uptrend. RSI and stochastic curves have shown upward convergence to the upswing which is an indication of strength and intensified bullish trend. To substantiate this stance, MACD has shown bullish crossover in the bearish territory that indicates upswings to prolong in near-term.

On a broader perspective, the major trend of this pair has developed the rising channel pattern.

Back-to-back gravestone doji and shooting star are traced out at channel resistance (refer monthly plotting), as a result, the current price slides below EMAs with bearish MACD crossover, both momentum oscillators have been bearish bias on this timeframe.

Trade tips: On daily trading grounds, at spot reference: 1.6767 levels, we advocate constructing tunnel spread, using upper strikes at 1.6815 and lower strikes at 1.6696 levels. The strategy is likely to fetch leveraged yields as long as the underlying price keeps dipping but remains above lower strikes on the expiration.

Alternatively, as we could foresee upside risks in the weeks to come, ahead of RBNZ’s monetary policy this week on hedging grounds, we advocate initiating longs in EURNZD futures contracts of mid-month tenors with a view to arresting further upside risks. 

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards -35 levels (which is bearish), NZD at -105 (highly bearish), while articulating (at 13:27 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex