EURNZD Technical Analysis: Bearish Rejection at Key Resistance Targets 1.95
Muhammad Faraz 
EURNZD Technical Analysis Bearish Rejection at Key Resistance Targets 1.95
EURNZD’s price has once again faced rejection from a formidable and historically significant resistance zone centered around 1.98000-2.00000. This price action suggests a bearish bias is prevailing, as buyers have repeatedly failed to break this ceiling over a three-month period. Our analysis projects a decline towards a primary target of 1.92000, with an intermediate target at 1.95000. This prediction is based on a key technical factor: a multi-touch resistance zone that has proven its strength across several months.
Current Market Structure and Price Action
The current market structure is range-bound with a bearish bias. The price has been oscillating between the strong resistance zone above (~1.9800) and lower support levels below (~1.9200) since August. The price is currently interacting with the lower bounds of this resistance zone after showing a clear inability to sustain momentum above it. Recent price action has shown signs of buyer exhaustion near this key level, indicating that a breakdown back towards the range lows is the higher probability outcome.
Identification of the Key Resistance Zone
The most critical technical element is the Strong Resistance Zone between approximately 1.98000 and 2.00000.
The strength of this zone is derived from:
- Historical Significance: This level has acted as a major swing high and a formidable barrier on multiple occasions throughout August, September, and October. Each attempt to break higher has been met with aggressive selling, solidifying the zone’s importance.
- Technical Confluence: The zone encompasses key psychological levels (1.9800, 2.0000) and aligns with the upper boundary of the multi-month trading range.
- Market Psychology: This area represents a point where long-term sellers consistently emerge, viewing rallies as opportunities to sell. The repeated failures at this level reinforce bearish sentiment.
This potent resistance confluence makes it a high-probability level for a bearish reaction.
Technical Target(s) and Rationale
Our analysis identifies the following bearish price targets:
- Primary Target (PT1): 1.95000
- Rationale: This level represents the most recent minor swing low within the range and the first significant support level on the path down. It is the initial logical target for a rejection from the highs.
- Secondary Target (PT2): 1.92000
- Rationale: This is the more significant target, representing the major November swing low and the primary support base of the entire multi-month range. A break below 1.95000 would open the path for a retest of this critical level.
Prediction: We forecast that the price will be rejected from the current resistance zone and move towards PT1 at 1.95000. A sustained break below that level would then target the more significant support and primary bearish objective at PT2, 1.92000.
Risk Management Considerations
A professional strategy is defined by its risk management.
- Invalidation Level (Stop-Loss): The entire bearish thesis is invalidated if the price achieves a daily close above the resistance zone, notably above 2.00000. A break and close above this multi-month ceiling would signal a major bullish breakout and invalidate the current range-bound, bearish bias.
- Position Sizing: Any short positions taken should be sized so that a loss triggered at the invalidation level represents a small, pre-defined percentage of your total capital (e.g., 1-2%).
Fundamental Backdrop
The technical setup is framed by the current fundamental landscape:
- Reserve Bank of New Zealand (RBNZ) Hawkishness: The RBNZ has maintained a relatively hawkish stance compared to other central banks, potentially supporting the New Zealand Dollar (NZD) and adding downward pressure on EURNZD.
- European Central Bank (ECB) Dovishness: The ECB’s cycle of interest rate hikes is likely complete, with potential cuts on the horizon in 2024. This divergence in monetary policy outlook can weaken the Euro (EUR) against its counterparts.
- Commodity Sensitivity: The NZD is a commodity-linked currency. Stability or strength in global commodity prices can provide underlying support for the Kiwi, acting as a headwind for EURNZD.
These factors contribute to the neutral-to-bearish sentiment surrounding the pair, supporting the technical outlook for a move lower within the range.
Conclusion
EURNZD is at a technical inflection point, once again testing the upper limits of its multi-month range. The weight of evidence, based on the repeated rejection from a strong resistance zone, suggests a bearish resolution within the range, targeting a move first to 1.95000 and potentially extending to the primary target at 1.92000. Traders should monitor for a confirmed rejection from current levels and manage risk diligently by respecting the key invalidation level above 2.00000. The reaction at the 1.92000 support will be crucial for determining the next major directional move for the pair.
Chart Source: TradingView
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. All trading and investing involves significant risk, including the possible loss of your entire investment. Always conduct your own research (DYOR) and consider seeking advice from an independent financial professional before making any trading decisions.
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