NZDUSD - Long Trading Idea on the Daily Chart.
Introduction:
Please read the full post before considering taking action. NZD has been the worst performing currency of all the majors for over two weeks, and it is risky business to try and call a reversal when the scenario is this bearish. However, just as AUD was planning a breakout up in its bullish moves, it was discouraged by mildly worse-than-predicted RBA reports and it gave back all its gains in a matter or hours, only to be confined once more to the previous ranges where it was being traded. Just as hard as it is to call a spot-on reversal, breakouts require substantial momentum and market volatility.
In the charts we see that NZDUSD just reached the first of its key support levels, even though it touched it before during the January 3rd flash-crash. The RSI is pretty much oversold, but a double bottom on it could confirm a descending trend that could break the second support and keep going. The overall bearishness is also fueled by an expectation of RBNZ rate cuts and it could plunge NZD down further.
However, this thursday (April 25th), the New Zealand's exports/imports numbers will come out and they are very likely to rapidly move the markets, no matter which way. It isn't rare to see a currency sitting on such critical levels (such as a support or a resistance) on the brink of the divulgence of such reports.
Although the idea is marked as a long, check below to see how we are placing our orders and our general strategy.
How to Proceed:
Price is already on the oversold area by the RSI on the daily chart. We opened a long here, but with a tight stop loss. If it breaks down with lots of momentum, a short order will trigger and its take profit target is set on the next support level. By then we will analyze price action, but the most likely scenario is trying to do the same thing. A tight long order with a short in hand in case it continues down.
Take Profit:
This first long's take profit targets would be on the middle of the previous range, 0.6835, as marked by the dotted horizontal line. If a short is to be opened, its target is the 0.64300 support zone. Check the arrows to understand the predicted moves. Those targets, howerver, can be dynamically changed, i.e., according to live price action, should circumstances vary.
Stop-loss (Invalidation of Analysis):
See the previous section for that.
Side-notes:
Please keep in mind that the markets have been reacting strongly to news these days, specially on smaller majors, such as the NZD and the AUD, which could create instability. We are trading the whole forex system here, not only a pair. These positions should be watched closely.
Please leave your comments below to inspire us to continue our work and don't forget to follow us! Feel free to send us a direct message with any doubts you might have and experience a great trading session!
Please read the full post before considering taking action. NZD has been the worst performing currency of all the majors for over two weeks, and it is risky business to try and call a reversal when the scenario is this bearish. However, just as AUD was planning a breakout up in its bullish moves, it was discouraged by mildly worse-than-predicted RBA reports and it gave back all its gains in a matter or hours, only to be confined once more to the previous ranges where it was being traded. Just as hard as it is to call a spot-on reversal, breakouts require substantial momentum and market volatility.
In the charts we see that NZDUSD just reached the first of its key support levels, even though it touched it before during the January 3rd flash-crash. The RSI is pretty much oversold, but a double bottom on it could confirm a descending trend that could break the second support and keep going. The overall bearishness is also fueled by an expectation of RBNZ rate cuts and it could plunge NZD down further.
However, this thursday (April 25th), the New Zealand's exports/imports numbers will come out and they are very likely to rapidly move the markets, no matter which way. It isn't rare to see a currency sitting on such critical levels (such as a support or a resistance) on the brink of the divulgence of such reports.
Although the idea is marked as a long, check below to see how we are placing our orders and our general strategy.
How to Proceed:
Price is already on the oversold area by the RSI on the daily chart. We opened a long here, but with a tight stop loss. If it breaks down with lots of momentum, a short order will trigger and its take profit target is set on the next support level. By then we will analyze price action, but the most likely scenario is trying to do the same thing. A tight long order with a short in hand in case it continues down.
Take Profit:
This first long's take profit targets would be on the middle of the previous range, 0.6835, as marked by the dotted horizontal line. If a short is to be opened, its target is the 0.64300 support zone. Check the arrows to understand the predicted moves. Those targets, howerver, can be dynamically changed, i.e., according to live price action, should circumstances vary.
Stop-loss (Invalidation of Analysis):
See the previous section for that.
Side-notes:
Please keep in mind that the markets have been reacting strongly to news these days, specially on smaller majors, such as the NZD and the AUD, which could create instability. We are trading the whole forex system here, not only a pair. These positions should be watched closely.
Please leave your comments below to inspire us to continue our work and don't forget to follow us! Feel free to send us a direct message with any doubts you might have and experience a great trading session!