- The euro plunged initially during the trading session on Wednesday against the Kiwi dollar but turned around to show signs of life again.
- This is an interesting turn of events because we are forming a massive hammer and this hammer, right at the 61.8% Fibonacci retracement level almost certainly attract quite a bit of attention.
Can We Rally from Here?
If we can break above the top of the hammer, then it could open up the possibility of a move to the 1.79 level. In the meantime, it would not surprise me at all to see this market bounce around between the 50% Fibonacci retracement level and the 61.8% Fibonacci retracement level. This is a market that, over time, will eventually try to break out to the upside, I believe.
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But we also have a lot of work to do. The bounce that we have seen during the day is a rather strong indication that perhaps we have bottomed out some little bit of a capitulation sell off, if you will. Nonetheless, I think this is a market that, given enough time, will turn itself around and not only hit that 1.79 level where the 50 day EMA is, but perhaps try to return to the 1.81 level.
If we were to break down below the bottom of the candlestick for the trading session here on Wednesday, then it could open up a move down to the 1.75 level. But right now, I don't believe that is as likely. After all, we had formed a massive double bottom previously near that area. So, it makes a certain amount of sense that the market certainly doesn't want to be down there. Because of this, I have to look for opportunities to get long of this EUR/NZD market yet again, as it looks like the New Zealand dollar itself is on its back foot during the trading session. Given enough time, I do think that we bounce and therefore I am bullish of this pair, but I also recognize it can be quite noisy.
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