Will EUR/NZD Continue Dropping?

 

Yesterday I posted an analysis about the candlesticks that had formed on the four-hour time-frame of EUR/NZD and the impending move to the downside that I expected. The drop that followed was almost a textbook example of such a pattern. The question is, what will follow next? After the pair dropped – and then bounced off from the support at 1.5565 – it formed a doji candlestick above that support, which was a signal of market indecision and sometimes can be taken as a reversal pattern. More importantly, yesterday the pair also formed a very clear shooting star candlestick on the daily time-frame, and that one is a clear signal for a new move the downside. Obviously the signals on the four-hour time-frame and the daily time-frame are contradictory, and as usual I would trust the one that formed on the longer time-frame, i.e. the daily one. If that signal is valid and the pair breaks below the support at 1.5565 we will likely see a further drop towards 1.5500 or even 1.5450.