EUR/NZD Reverses on Failed Breakout: Bearish Signal Activated
30 October 2024
In today's technical analysis, let's examine EUR/NZD, where an inverse head and shoulders pattern has developed with a blue neckline marking the breakout level. A key move unfolded yesterday as the price initially broke above this neckline, signaling a potential bullish move. However, the momentum faltered, and the price quickly dropped back below the neckline, indicating a false breakout. This failed attempt to push higher has shifted the outlook to bearish, making this a strong signal to sell.
Given this wasted bullish opportunity, my view on EUR/NZD is firmly negative. The first target in this bearish scenario is the black trendline, which connects the low points of the head and the right shoulder. But, with a failed inverse head and shoulders formation, the potential downside could be significant, with room for further declines beyond this initial support level. This setup suggests the bearish momentum might accelerate, reinforcing a short-term bearish bias.