NZDUSD - Trade of the Week 25-Apr-2016
Updated
Greetings Fellow Traders,
NZDUSD has provided us with some good opportunities, but also some frustrating ranging price action over the last few months. Which is why it might seem odd that I've selected this pair as the trade of the week, there are actually several reasons why, here's the setup(s):
We'll start off with a projected price channel that I've had my eyes on since very early this year. Projected price channels are a good way to use market defined strength to determine a logical relaxation point for the trend. The key with these channels however is that they are market defined, which is what makes them so powerful. The Channel end points are determined by using the absolute low/high and the first major retracement. On the above chart this is the A and B point. The strength of the channel is then determined by a trend continuation move that fails to break our initial point A. In this case that is point C - please note that a potential point C could also have been at the swing low mid november 2015, highlighted. From here patience is all that is needed once price reaches it to close our trade or open new ones.
2. Goes hand in hand with the price channel above, but the completion of an AB=CD pattern with excellent Fibonacci ratios. I don't use these ratios, but I do look at the key values and measured moves of the ABCD so let's take a look at that.
Point A and Point B have a difference of 700.6 pips (.61968 to .68974)
Point C and Point D have a difference of 707.0 pips (.63470 to .70540)
I would say that is close enough to confirm my AB = CD, Margin of error with less than 1% over 700 pips.
3. Candlesticks and additional structure. This particular candlestick is one of my favorite to trade if the proper structural elements are in play, in this case they are.
Daily Chart illustrating Close below support:
Short term targets will be .6750 but a more realistic profit taking level will be near .65000 where the real trend continuation confirms. Ultimate targets leading into the summer could bring us as low as .59-.60 if we get that necessary confirmation.
I will be selling NZDUSD and any rally this upcoming week. This move also very strongly correlates with the breaking of the Channel/Wedge in a bullish direction on GBPNZD - check my analysis on that, it's been posted many times but never confirmed until the end of last week.
Feel free to comment/like/follow
NZDUSD has provided us with some good opportunities, but also some frustrating ranging price action over the last few months. Which is why it might seem odd that I've selected this pair as the trade of the week, there are actually several reasons why, here's the setup(s):
We'll start off with a projected price channel that I've had my eyes on since very early this year. Projected price channels are a good way to use market defined strength to determine a logical relaxation point for the trend. The key with these channels however is that they are market defined, which is what makes them so powerful. The Channel end points are determined by using the absolute low/high and the first major retracement. On the above chart this is the A and B point. The strength of the channel is then determined by a trend continuation move that fails to break our initial point A. In this case that is point C - please note that a potential point C could also have been at the swing low mid november 2015, highlighted. From here patience is all that is needed once price reaches it to close our trade or open new ones.
2. Goes hand in hand with the price channel above, but the completion of an AB=CD pattern with excellent Fibonacci ratios. I don't use these ratios, but I do look at the key values and measured moves of the ABCD so let's take a look at that.
Point A and Point B have a difference of 700.6 pips (.61968 to .68974)
Point C and Point D have a difference of 707.0 pips (.63470 to .70540)
I would say that is close enough to confirm my AB = CD, Margin of error with less than 1% over 700 pips.
3. Candlesticks and additional structure. This particular candlestick is one of my favorite to trade if the proper structural elements are in play, in this case they are.
- A brand new high was created, and firmly rejected.
- Price closed below it's opening price, giving us a bearish body.
- Bearish Body occurred with a significant gap in price to start this candle.
- Price closed below a significant bullish strength support (on the daily - see chart below)
- Long term trend is bearish - this will mark the beginning of a trend continuation attempt
Daily Chart illustrating Close below support:
Short term targets will be .6750 but a more realistic profit taking level will be near .65000 where the real trend continuation confirms. Ultimate targets leading into the summer could bring us as low as .59-.60 if we get that necessary confirmation.
I will be selling NZDUSD and any rally this upcoming week. This move also very strongly correlates with the breaking of the Channel/Wedge in a bullish direction on GBPNZD - check my analysis on that, it's been posted many times but never confirmed until the end of last week.
Feel free to comment/like/follow
Note
NZDUSD Daily intentions are clear - 8 hours/US Session to confirm. As of this comment we are trading below a key technical level. Daily close will have a set up targeting .65-.66 area.Apologies for the lack of posts between the AUD and NZD pairs and the GBPCAD set up everything has been going according to plan just taking it's time.
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