GBPNZD: Probably test down to 2.04 area

FX:GBPNZD   British Pound / New Zealand Dollar
36 0 0
I am looking for short scalps in GBPNZD             for the next several days, and will look to exit my entire short position at a measured move target OR a reasonable reversal setup beforehand (see chart).

The market tried to form a wedge bottom and double bottom (or perhaps a Lower Low MTR             ). Earlier this week, the low-probability event occurred, with a bear breakout of a bear channel . Usually, this results in at least two legs down (as trapped bulls will scale in and exit on the first pullback) and often reaches a measured move target based on the height of the wedge .

The target is particularly strong. It coincides with a MMT             based on a bear spike from September-October (on the weekly chart, the spike is clearer). Also, the next bear leg may make a Leg1=Leg2 MM down based on the prior bear leg down. That target is at about the same level.

It also is at about where a projected Trend Channel Line would be, which is a bearish target after a reversal off of a bear trend line in a bear channel .

When multiple targets (magnets) are at about the same price level, the magnetic pull becomes stronger, and the target is more likely to be tested. This is often in the form of a sell vacuum, since because there are more targets, more bulls see them, and will not buy until it is tested.

The breakout bar is also strong, increasing the odds of some more down.


Odds are that there will be more selling. The bear stops are above the breakout bar, but the bulls will probably not be able to exceed it.

Traders will look to short until the targets are reached, and a reasonable reversal setup occurs.
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