EURNZD inserted the ascending regression channel on June 2, when it broke through the 1.7550 support.
Despite trading within a bullish channel, entering it could lead to further weakness towards the lower region of the 6-month long channel. Before that, the median regression line must give in to the expected bearish pressures.
A break of the TS1 support will increase the chances of reaching the median regression line near 1.73. There, further clues will be provided.
With the pair battling between the medium-term upper channel, the short-term regression line and TS1 support, a breakout can be expected soon.
The below chart indicates that the 1.7405 region will play a critical role in the pair’s short and medium-term direction.
A break of the said support could lead us to the 1.7303 Fibo level first and then continue towards the 1.73 big figure. This could then break to fresh lows down at the lower channel below 1.72.
A bounce, on the other hand, could trigger a move towards 1.7590 and perhaps even the 1.76 round resistance. This is where the 50% Fibo of the 1.7780-1.7405 bearish leg and the upper channel interact.
In case the upside continues above 1.76, the chances of this opportunity being invalid will increase as at such levels EURNZD will be trading outside the channel again.