The EUR/NZD has delivered some excellent trading opportunities across all the timeframes this morning to the short side, following the recent heavily bearish sentiment towards the New Zealand dollar which has seen it weaken against all the major currencies. Indeed longer term the NZD is now looking increasingly oversold, so we may see this trend reflected on the slower timeframe charts in due course.
This morning’s move was signalled initially with a move below the volume point of control (VPOC) on the 30 minute chart ( the yellow line), a move that was duly supported with rising volume and confirming the bearish sentiment. In addition, the transition in the trend monitor indicator from blue to red also confirmed this reversal, coupled with a pivot high indicator prior to the move through the VPOC. Since then, momentum to the downside has increased with volumes also rising sharply and confirming the wide spread down candle as we approach a potential area of support in the 1.5298 region, and should this be breached then we can expect to see a further move lower and down to test the next level at 1.5256.
To the left of the chart the 60 minute currency strength indicator is also confirming this picture, with the NZD, the white line continuing to rise strongly in this timeframe, and the euro ( the orange line ) continuing to fall, with both having some way to travel before reaching their respective overbought and oversold regions on the currency strength indicator.