EUR/NZD 4H Timeframe AnalysisEUR/NZD 4H Timeframe Analysis
Trend Analysis:
On the 4-hour timeframe, EUR/NZD is in an uptrend, creating higher highs and higher lows. The pair recently broke a minor key resistance at 1.83800, followed by a pullback that created a minor liquidity zone. As the price resumed its upward momentum, it broke another minor resistance level, signaling increased buyer interest.
However, as buyers pushed the price toward the next minor resistance level, a double top formation emerged, indicating a potential reversal. This reversal has resulted in the price losing bullish momentum and breaking down, liquidating stop-loss orders placed by buyers in the liquidity zones below.
Price Action Expectation:
At present, the price has retraced below the previous minor resistance at 1.83800, which now serves as a key level to watch. A break above this level is necessary to confirm renewed bullish momentum.
Fundamental Correlation:
The upcoming release of Germany’s Prelim CPI m/m, with a previous figure of -0.2% and a forecast of 0.3%, will likely influence the Euro's strength.
Better-than-expected CPI (above 0.3%):
This would indicate rising inflation in Germany, potentially increasing the likelihood of further monetary tightening by the European Central Bank (ECB). A stronger Euro could provide upward momentum for EUR/NZD, aligning with the technical bullish scenario of breaking above 1.83800.
Worse-than-expected CPI (below 0.3%):
A lower-than-forecast CPI could weaken the Euro, as it reduces the likelihood of immediate hawkish actions by the ECB. This could cause EUR/NZD to remain under the 1.83800 resistance or even retest lower liquidity zones.
Trade Setup:
Trade Type: Buy Stop (Breakout Trade)
Entry Price: 1.83990 (confirmation of a break above minor resistance)
Stop Loss: 1.82770 (below the liquidity zone to protect against false breakouts)
Take Profit: 1.86520 (aligned with the next significant resistance level)
Conclusion:
EUR/NZD is positioned for a potential bullish continuation if it breaks above the 1.83800 resistance. However, the direction could also depend on the outcome of the German Prelim CPI release. Traders should be prepared for heightened volatility around the news and adjust positions based on price action following the announcement.
Risk Management:
Ensure disciplined risk management with a 1:2 risk-to-reward ratio. Keep position sizes aligned with account equity and monitor real-time price reactions to the news event to validate or invalidate the setup.
