Trades between 200 and 100 week MA, but there is more to the technical picture.

I received a special request to look at the EURNZD from a technical perspective as the price is testing some key resistance against the 200 and 100 week MAs.

And indeed it is.

Looking at the weekly chart above, the 200 week MA is at 1.5915, while the 100 week MA is at 1.59723. The price is currently trading between the two levels at 1.5930. The high this week extended to 1.5961 - close to that 100 week MA ceiling but not quite to it.

Last week, the price did move above both MAs on it's way to new highs going back to June 2016. However, that break failed, and the price closed below the MA lines.

This week, the price moved to a lower low vs. last week (low reached 1.5627) but there has been a strong move higher mainly on the back of the more dovish RBNZ statement and comments on Thursday.

Technically, off this chart alone, the pair is in limbo between the two MA levels. It could go either way.

Let's drill down to lower time frame charts to see what the price action is saying from that perspective?

Looking at the hourly chart above, we can see the "markets" price action around the week MA levels (those MAs are relatively steady at 1.5972 and 1.5915), as well as the other levels that shorter term traders might be focusing on. Remember the 100 week MA is at 1.5972 and the 200 week is at 1.5915.

As mentioned earlier, the price did move above the 100 week MA last week, but failed (see larger Red shaded area). Looking more closely at that break, the price moved first above the high from April 28th at 1.5941 (red circle 1), retested that level on May 4th and 5th at 1.5941 (red circle 2 and 3) as it was breaching the 100 week MA.

However, once it failed, and moved below the 1.5437-41 level again (on May 5th), the buyers turned to sellers.

Yes, there was a gap opening above the level on May 8th, but that failed relatively quickly.

Yesterday (see red circle 4), the level was tested and the price fell back lower. The price also fell below the 200 week MA line at 1.5915 in trading yesterday (more bearish).

Today what happened?

Looking at the price action the price action is more to the upside. First, the price consolidated below the 200 week MA line at 1.5915. In the NY session, however, we moved back above the 1.5915 level AND the 1.5937-41 level. That break fell short of the 100 week MA though.

So what is it telling me?

Stay above the 200 week MA at 1.5915 keeps the bulls in control. Having said that, we need a break above (and stay above the 1.5937-41) and then the 100 week MA at 1.5972. That is the road map for the buyers, and keeps them in control.

On a break below the 1.5915 level, you can argue that the 1.5817-33 is the wide line in the sand risk for longs/buyers. That is where the 100 and 200 hour MAs are found and the 50% of the range since the peak at 1.6018. A move below those levels would turn the bias more convincingly to the bearish side.

SUMMARY.

The weekly chart gives a broad view of the EURNZD, and indeed it looks like we are at a key area. However, it only tells a piece of the story. As a trader, it is important to drill down to lower time frames as well, in order to get a feel for what the smart, risk focused traders are thinking/doing/leaning against in their trading. That picture may include stuff from the weekly chart.

Currently, there are reasons to think the EURNZD is bullish. However, it does come with some caveats off the hourly chart. We need to get and stay above the 1.5941 level. That certainly would give the idea of a break of the weekly MAs more credence.

So watch that level (we are below it now) and watch the weekly MAs. If you want a wider risk level for bulls (or a level to lean against on a dip), the 100 and 200 hour MA and 50% is the line in the sand now. Be aware.