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NZDUSD - The Test Is Not Over

FX:NZDUSD   New Zealand Dollar/U.S. Dollar
584 19 25
Greetings Fellow Traders,

Great trades across the board yesterday, shortly after those trades came to life we find ourselves with a new day an basically the same set up.

I've gone ahead and taken a look at the lower time frames and the key technical level is already being defended for further downside, we are simply waiting on a couple key things to fall into place.

1. Lower TF close below bullish strength from .6590 low yesterday
2. 4 hour close in favor of a defended key technical level.

Likely targets and areas of major buyers are marked on the chart as we look for other bull levels to break so we can either continue this trend or re-analyze the outlook.

Here's a look at the 15 minute time frame as of this posting and the current bull strength.
snapshot

Feel free to comment/follow/like.
There is a large 'cup with handle' pattern on the daily chart. The momentum is beginning to trend upwards. It has test a major down trend line several times and now appears poised to break upwards. I'm LONG with a TP in the .7300 area.
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It does look like a cup, but don't you have to wait for the handle to form before going in? Otherwise it could also look like a double top.
+1 Reply
Synapse PRO GeneraldisastersInc
Good perspective. Thanks for the insight General.
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Synapse PRO vandaloc
Hi vandaloc, thanks for sharing. I'm not here to tell you how to trade but, I will provide my opinion for you on this matter. The weekly bearish strength trend line will remain in tact until it is broken. Until that point, NZDUSD highly favors the bears, a break above will bring some bullish moves, look at EURUSD in recent weeks trading in that regard.

As far as the cup and handle pattern, there is something fundamentally wrong with this perspective. The cup and handle pattern by definition is a continuation pattern, it must be preceded by an actual trend. Very similarly to the 'Head and Shoulders' pattern as a reversal indicator. I commonly see traders pointing out these reversal patterns in a ranging market, you're misunderstanding the market structure by not having an initial trend (relative to the time frame of course).

This being said, I am not oblivious to the recent market price action, but I will not be bullish on NZDUSD until we can confirm a break of that weekly trend line.
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vandaloc Synapse
Of course there was a prior up trend. If you look further out on the DAILY chart, you can see that the previous downtrend ended on 9/22/2015. From there you'll encounter a Higher High on 10/14/2015 and a subsequent Higher Low on 11/17/2015. These most definitely signaled a change in trend from down to up! Also, the run up to 12/28/2015 can be interpreted as a truncated High, as it quickly reversed forming the initial setup for the Cup with a Handle pattern formation we see today. Sure you'll get your downward probes (that closes green) but It's only a matter of time before it breaks out above the .6750 area and into new highs.
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Synapse PRO vandaloc
I will zoom out to the DAILY chart for you:
snapshot


What you are perceiving as an uptrend is a ranging market, a correction for the downtrend we are already in. If we break above .68000 we are not continuing an uptrend, we are breaking the downtrend. If we break below .64000 we're continuing the downtrend. This trade was taking off the Daily and Weekly charts but used the 15 minute for entry.
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vandaloc Synapse
I disagree! Most recently, that downtrend line has been tested twice in short order. This has not occurred more than once in over the past year. The chart clearly shows a 1,2, a, b pattern. Maybe you should take a look at the WEEKLY US dollar chart where you'll clearly see the breakdown beginning there? What you label as "continuation" I view as "coiling" with the next major direction being UP. We agree, The breaking of the long term downtrend line will confirm an UPTREND. It's just my analysis has gotten me in much earlier. Many will be forced to cover their shorts, which will just make that breakout that much more powerful. No question this market will be much higher in the days and weeks ahead.
snapshot
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vandaloc vandaloc
This is not my chart! But I am in agreement with this.
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Synapse PRO vandaloc
I'm just going to be blunt, If the weekly trend line breaks, we're bullish. It hasn't though, so we're not. I sold at .6720 and we're at .6651 as I write this. That's just under 70 pips...the trade analysis was already confirmed, so most of this debate is futile.

You're free to speculate what you think the market is doing, I'll continue to trade with what the market is actually doing. Right now it's selling off, it literally cannot be bullish until that trend line is broken on the weekly chart. It doesn't matter how many times it gets tested or in what order, or what pattern. It MUST break to be bullish.

I don't know the future, neither do you. Trading is about risk calculation and you're going to have a hard time convincing me that your set up is valid if we begin trading below .6550. I'm prepared to be bullish if the market indicates that's where its going but the long term bears have the advantage right now.

Trading on NU is going to be up and down between .64000 and .67500 until one of the two gives out.

All that aside, I appreciate you taking the time to share an additional point of view with a chart.
+1 Reply
vandaloc Synapse
Well, I've been LONG since last month. I took 4 Lots, (on a 61.8% pullback from that initial swing high on the DAILY), at .6428. I originally was expecting a 3rd wave, but when price failed to break above wave 1. I had to reassess my count a little bit at the formation of the minor 1,2, A, B count. The rally and sideways trade since September can be interpreted as waves A and B or 1 and 2 within a new bullish cycle.
The Cup n Handle was just an interesting bonus observation. I agree the biggest points of interest lie at .6750 area and the .6890 area for me, as I have Limit orders at 4 more Lots each waiting to scale into. I think at this point the break of that trend line is a foregone conclusion as far as I'm concerned. Time will tell, but the price action has already spoken.
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