EURNZD Forex Correction Wave Pattern

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EURNZD Forex Correction Wave Pattern

EURNZD Forex Correction Wave PatternEURNZD has been in a steady downtrend but the pair is starting to make a forex correction on its 4-hour forex chart. Price has bounced off support at the 1.3900 major psychological level and might pull up to the dynamic resistance around the longer-term exponential moving average.

For now, the short-term EMA is still treading below the long-term EMA, confirming that the downtrend is likely to stay intact. Stochastic is pulling up to the overbought zone, which means that buyers are about to lose steam and that sellers might take over soon. If that happens, EURNZD could resume its drop to the previous lows or perhaps create new lows.

Forex Correction Levels

The 1.4200 major psychological level could be a good resistance area, as this lines up with the moving average and an area of interest. This level has held as support in the past, prior to being broken earlier this month.

The path of least resistance is to the downside, even though an RBNZ official recently pointed out that they’re not looking to hike interest rates anytime soon. RBNZ Assistant Governor McDermott said that their inflation outlook is very weak and that several downside risks are still present.

However, the euro zone faces much worse prospects, even though the Greek debt talks could end up in a compromise between the government and its creditors. The prospect of a Grexit continues to weigh on the shared currency, along with the likelihood of debt contagion in the region.

Still, the euro could pop higher if the talks are settled amicably by the end of the week, potentially leading to a larger forex correction for EURNZD. The line in the sand is around the 1.4500 major psychological level, which is also an area of interest and is beyond the moving average resistance.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com