By: Mike Kulej
One of the longest, and the strongest, trends present in the currency markets during the last few years took place in the Euro-New Zealand Dollar pair. Since early 2009, when it reached a high of 2.5800, the price fell to the recent low of 1.6924, a staggering drop of almost 9000 pips.
During this time, there was only one serious attempt by the market to reverse. It failed, and the EUR-NZD spent better part of last year drifting sideways, before selling off again and making another low in early January.
Will there be a Reversal?
Currently, though, the price is trying to reverse long-term one more time. So far, it rallied to just above 1.8000. It is the third time in recent months that this level is providing a strong resistance, a sign of mounting buying pressure. Eventually, areas of multiple resistance/support tend to be broken and chances are the same will happen here.
Even if the current price run up of 1000+ pips seems to be overextended, technical indicators to not show signs of being oversold. The MACD, for example, is not in divergence, while the RSI still has more room before it enters the oversold territory. If the EUR-NZD climbs above the immediate resistance, it could continue higher, maybe even to the next resistance of 1.8700.