NZDUSD - The Bears Are Stepping In!
Updated
Analysis:
As we can see from the charts price is clearly in a downwards trend signalling to us that we want to only be shorting this pair to go with the trend. We can confirm that price is in a downwards trend by the fact that we're forming lower highs and lower lows and the fact that we have a downwards trendline which has been respected multiple times. Price has pulled back to an area that we're very interested in as its held multiple times in the past signifying that it is a strong area and we have other confluence factors at this level too to back up this setup. To add to this idea we've seen the rejection of the 61.8% fib level showing that the sellers have stepped into the markets which helps with our idea. We've also seen the rejection of the downwards trendline just as we expected would happen. This shows that the bears are in control of the market, indicating that there should be more bearish momentum on the horizon which goes with our idea. So technical wise we have a very good reason and bias to the short side but we don't just look at the technicals so taking a look at the fundamentals too, we see that we also have these on our side. Firstly we have the USD which is the 2nd strongest major currency compared to the NZD which is the 4th strongest major currency so this is already pointing to be bearish on NZDUSD but looking further to add more confluence we also see that the USD had a decrease in long positions and a huge decrease in short positions by institutions so overall this is looking bullish for the USD whereas for the NZD we saw a small decrease in short positions but a larger decrease in long positions by institutions which is a bearish indication. Overall we have multiple confluences lining up signalling to us to be shorting the NZDUSD which is why we have a bearish bias on this pair.
Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read. We appreciate it all.
Stay Safe - JPI
Disclaimer:
This does not constitute as financial advise. We are not responsible for any monetary loss that you endure. Trading is hard to be profitable with and we take losses just like everyone else does to. Our ideas won't always be correct which is why we urge you to always do your own analysis first before entering into the market but please feel free to use our analysis to assist you with yours.
As we can see from the charts price is clearly in a downwards trend signalling to us that we want to only be shorting this pair to go with the trend. We can confirm that price is in a downwards trend by the fact that we're forming lower highs and lower lows and the fact that we have a downwards trendline which has been respected multiple times. Price has pulled back to an area that we're very interested in as its held multiple times in the past signifying that it is a strong area and we have other confluence factors at this level too to back up this setup. To add to this idea we've seen the rejection of the 61.8% fib level showing that the sellers have stepped into the markets which helps with our idea. We've also seen the rejection of the downwards trendline just as we expected would happen. This shows that the bears are in control of the market, indicating that there should be more bearish momentum on the horizon which goes with our idea. So technical wise we have a very good reason and bias to the short side but we don't just look at the technicals so taking a look at the fundamentals too, we see that we also have these on our side. Firstly we have the USD which is the 2nd strongest major currency compared to the NZD which is the 4th strongest major currency so this is already pointing to be bearish on NZDUSD but looking further to add more confluence we also see that the USD had a decrease in long positions and a huge decrease in short positions by institutions so overall this is looking bullish for the USD whereas for the NZD we saw a small decrease in short positions but a larger decrease in long positions by institutions which is a bearish indication. Overall we have multiple confluences lining up signalling to us to be shorting the NZDUSD which is why we have a bearish bias on this pair.
Please feel free to leave any comments you have and like this idea if you agree with us. Any feedback or comments will be read. We appreciate it all.
Stay Safe - JPI
Disclaimer:
This does not constitute as financial advise. We are not responsible for any monetary loss that you endure. Trading is hard to be profitable with and we take losses just like everyone else does to. Our ideas won't always be correct which is why we urge you to always do your own analysis first before entering into the market but please feel free to use our analysis to assist you with yours.
Trade active
With our entry criteria met and our order filled we're now short NZDUSD expecting that we will see a bearish continuation.Note
Yesterday we saw a pretty strong continued bearish rejection showing the pressure from the bears now that we have rejected the area, downwards trendline and the 61.8% fib retracement level. Today we have Fed Powell testifying which will provide a lot more momentum to the USD. If this news comes out hawkish then we could expect to see a stronger rejection and continuation to the downside. If the news comes out bearish for the USD then there is a strong chance that we will see the area that we've recently rejected from retested. If we break this level then our trade would be invalidated but this seems like a very strong level so we find this an unlikely scenario. We'll be sure to update everyone once the news comes out and we see how the market reacts to it.Note
Looking at the weekly timeframe we also have another positive factor to helps our idea. We can clearly see that price is rejecting this longer term downwards trendline showing that the bears are still in control and we expect that this will continue. This will be confirmed once we get the weekly candle close but for now everything is looking good.Note
On Friday we ended up getting a pretty strong bearish candle close which is looking good for our trade idea. Overall currently things are looking as expected on this pair. Coming into this week key days to watch out for will be Wednesday & Thursday as these are key days in regards to news for the USD. If we get positive news for the USD then price would drop on this pair. Depending on how positive the news is we could see a very substantial move to our take profit as there isn't any levels of support until we reach our take profit. If the news is bearish then we will see how the market reacts and we'll go from there but with the recent USD news and strength we still think that price will drop to the downside as we see some more momentum for the USD. We'll be sure to update you once we get the news for the USD or if we see any big changes in price.Note
Update - 4Yesterday we saw a huge move on this pair which has had a massive positive impact on our position so we're happy about this. As mentioned previously with our other USD bullish ideas the USD is now the strongest major currency whereas the NZD is the 4th strongest major currency so this goes in our favour further. As of the most recent report by institutions we saw a big decrease in long positions on the NZD whereas for the USD we saw a decrease in short positions so this supports our bearish thesis on the NZDUSD. Yesterday we had some news come out for the USD which was better then expected and the market has reacted very positively to that showing the USD bulls have stepped in. With the Fed chair speaking later today this could be the final thing we need to get a push down to our take profit and this is what we will be looking for later today. Like always we'll be sure to keep you updated once we get the news!
Note
Update - 5Yesterday we were expecting the once the Fed chair spoke that this would have a big impact on our trade. Whilst it didn't have a massive impact it did still have a positive outlook and we did see some bullishness on the USD so this helped out our trade. Later today we have unemployment claims coming out which could give us the final push that we need for price to hit our take profit. If this happens then we will make you all aware, if this isn't the case then we will still update you with what we see and expect next.
Note
Update - 6This trade was looking as if it was going to hit our take profit on Thursday put price came just shy and missed our take profit by 3 pips and whilst this may be slightly annoying we still have confidence in this trade. This stuff happens sometimes and the sooner you accept it the better your trading will be. We still have reason to be in this trade and in fact we have more confidence in this trade now. On Friday price made a move to the upside however this move is still in line with our downwards trend so this was expected and normal. Price has pulled back to a previous area of support which we now expect to hold as resistance and we have more confluences to add to why we think this will happen. At this area we also have the 61.8% fib retracement level from the short term move which is often classed as the strongest fib retracement level so we expect sellers to be sat here waiting to enter. We also have our downwards trendline which in the past has been respected and we've sellers step in and push price down, which is what we expect to happen again. With all of these confluences and the fact that price is still respecting the trend, we still see price heading to the downside which is why we still have confidence in this setup and continue to have a bearish bias.
Note
Update - 7On our last update for this pair we called out an area that we expected to hold as resistance, however this didn't end up happening. Yesterday we had some news that came out for the USD which was worse then expected and we've seen that be reflected in price for this pair. Whilst our area of resistance didn't hold as expected, we are still bearish on this pair and we still have confidence in our trade. As of the most recent report for institutional positioning we did see an increase in long positions for the NZD which doesn't favour our idea, but we're currently approaching a major level of resistance and the top of a descending channel so we anticipate that there will be a lot of bearish pressure sat around this level which favours our trade, giving us our bearish outlook currently. Along with this we also have FOMC meeting minutes coming out on Wednesday which will provide a lot of momentum for the USD. If we're able to see this news release come out bullish for the USD then with this pressure along with the bearish pressure from the area we've marked out on this pair, we have a very strong chance that price would drop massively and give us that catalyst we need for price to hit our take profit. This is what we'll be looking for in the upcoming days and once we get the news release and see how the market reacts we'll update you with our thoughts and ideas.
Note
Update - 8Price has now reached our area of resistance where the top of the descending channel trendline is and we've seen some weakness start to show which looks good for our trade. The daily candle close yesterday was bearish which is why we think this little bullish move might be coming to an end. Today we have a lot of news due to come out for the USD which if bullish we could see a stronger price rejection and a continuation to the downside. This is what we'll be looking for today and we will update you all later once we see how the market reacts.
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