AUDNZD Building the trade idea.Hey Traders,
Today I wanted to run through Australian dollar and New Zealand dollar trade idea. My whole thought process and how it's currently planning out. Then, what opportunity I can see forming to potentially give us around a 70 Pip profit trade, if not further, heading up for the 200 pip mark. Keep an eye on it and let me know what you think.
First thing we noticed when building this trade idea was the trendline break, which we can see happened with a fair bit of force on AUDNZD as we broke that at number one on the chart, you can see we push through quite strong, which indicates we may have a turn in trend or at least a push back up to the local supply in which created the downtrend in the first place.
Part 2 we were looking for confirmation that we did have the bullish power that managed to break that trend and be able to continue and turn the price action, which is what we witnessed when we had that local break of structure on the four hour at number 2 on the chart. As you can see, it was very near the tops of the move that created the breakthrough the trendline, however, it was strong enough to push through, regroup a little there in that area of supply and then push higher, setting a higher high for the first time in fair few days.
Part 3 we are looking to identify some new demand where the price has come back, sit for a little bit and then gave us an indication that that is where we're going to start pushing from, a fair price where buyers come into the market. You can see at #3 this is where we dipped in, although we broke a lower low technically on the chart there, I was looking and expecting a bigger pull back than what we saw at #2 solely because of the gratitude of the move of #1. As we pulled back, regrouped and then went higher, we can see that we have formed a nice demand area there which could be a great turning point for the price in the future.
Part 4 is arguably the most important one because it verifies the new localized demand area, which was just formed, and that's breaking a higher high set by Part 2. Once we broke the structure. As you can see, it's happened quite recently. It's indicating that there is enough demand and orders in that area to be able to push prices higher now and potentially into the future.
Now as the trading plan is coming together and we've seen many areas of price action which we want to see, there's still a little bit more that we need to observe. First thing is we want to see a pull back into the area of demand. We want a nice steady downtrend pull back on the lower time frames into our demand area, so we can start looking for entry triggers and confirmations that we can head higher.
Part 6 is still a while away yet, we need part 5 to confirm everything so we can build a plan. But if we do get to part 6, it's going to start looking for an entry signal with a break of trend, very similar to what we're looking at right now on a lower time frame. I will keep you up to date to see if this price can come back down and give us what we want to see.
I hope you enjoyed this analysis. If you trade like this or you have any questions about it, please comment below or if you just like the whole run through like the idea, it helps a lot with future content. Good luck traders.
