A possible RSI (14) Bullish Divergence is forming with EUR/NZD at 4H time frame. RSI Bullish Divergence happens when price action is on a downtrend (lower lows) while RSI is getting higher lows. RSI divergence is most useful following either an uptrend or a downtrend and signifies possible trend reversal. For this formation, we are expecting prices to turn bullish at least in the near term (see below chart).
In terms of fundamentals, NZD has always served as a proxy for Chinese economic growth (similar to AUD). Strong positive sentiment for growth in China will make NZD stronger thus make EUR/NZD pair to go lower. Just be mindful that this possible reversal to the upside may be short as the primary trend for this pair is still bearish. In terms of support and resistance levels, strong support may still be at 1.71335 which means there is still a long way down before a possible bounce at this level (see below chart).
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EUR/NZD is not treated by most forex broker as part of the main forex currency pairs thus may incur larger swaps when traded.
As always take this analysis with a grain of salt. This is not a piece of investment advice and no one can predict with absolute certainty where prices will go. We will go back to this article a few days from now to see what happens.
Update June 9, 2020 – EUR/NZD has indeed gone up by approximately 131 pips since yesterday when this analysis was published. See June 9, 2020 EUR/NZD chart below.
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Update June 11, 2020 – EUR/NZD is up by approximately 240 pips. See June 11, 2020 EUR/NZD chart below.
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