EURNZD stuck within tight trading range
Euro/New Zealand Dollar (EURNZD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
EURNZD ended the week -1.95% lower at 1.7878 after edging lower 12 pips (-0.07%) today. Trading 48 pips higher after the open, the currency was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (EURNZD as at May 22, 2020):
Friday's trading range has been 103 pips (0.58%), that's far below the last trading month's daily average range of 198 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for EURNZD. Prices continued to consolidate within a tight trading range between 1.7834 and 1.8011 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on April 22nd, EURNZD lost -1.33% on the following trading day.
After trading down to 1.7834 earlier during the day, the pair bounced off the key technical support level at 1.7850 (S1). The failure to close below the support might increase that levels importance as support going forward. The market found buyers again today around 1.7834 for the third trading day in a row after having found demand at 1.7851 in the previous session and at 1.7850 two days ago.
The forex pair shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
As prices are trading close to May's low at 1.7606, downside momentum could accelerate should the FX pair mark new lows for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior two Lows" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for EUR/NZD. Out of 217 times, EURNZD closed lower 53.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 54.38% with an average market move of -0.23%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more