Saturday, September 10, 2016

EUR/NZD Closed the Week with a Pin Bar and a Bullish Divergence

The pin bar and the divergence on the RSI indicator are very obvious on the weekly time frame. That means that next week we can expect a move to the upside.

Since the figure we can see on the screenshot is a flag with four clear points we can use to draw it (which is a necessary and acceptable condition to define this pattern) we could conclude that the move to the upside will continue to the resistance trendline towards the 1.6140 level.

From that point there are two scenarios:

In the first scenario the pair will break above the trendline and it will reach the limit of that flag which is 180 pips from the breakout level to the upside.

In the second scenario the pair will drop and only then start rising again and break above the trendline.

Considering that before it started forming the flag the pair rose with 450 pips, I think that the second wave to the upside on the monthly time frame could rise with another 450 pips after the breakout.