Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
Short NZDUSD: Potential Trade for Next Week
Last week we said that we can expect more volatility and range trading in the Fx market, which has largely transpired so far. For instance, the most traded currency pair, EURUSD, has spent this entire week in a mere 120 pip range, roughly between 1.13 and 1.14.
In light of this situation, there are few established themes in the Fx market other than the very hawkish Fed. Ultimately, the hawkish Fed should keep the USD generally supported, at least for the coming weeks, into that March 16 meeting.
We are thus considering a potential trade in this direction of a firm dollar. Below we look at the NZDUSD pair as the one with an interesting technical setup at the moment. The potential bearish opportunity here - if it unfolds - could yield 100-150 pips or more.
NZDUSD testing the 0.67 resistance zone
In the larger scheme of things, NZDUSD is testing a key resistance zone at 0.67. As can be seen on the chart below, this is an important technical area due to several converging factors. Mainly those are the prior lows, the 55-day moving average (blue), and the falling trendline of the bearish channel formation.
Thus, for our bearish NZDUSD setup described below, we need this 0.67 resistance to hold. If NZDUSD breaks above it, then the technical picture will change, and the setup - as presented below - will likely be canceled.
Bearish breakout on intraday timeframes to give the trigger signal
Switching to the “trigger chart,” we are looking at the 1-hour timeframe in the chart shown below. Here we can see a pretty consistent rising channel formation. Naturally, a bearish break of this formation is likely to trigger an acceleration of downside price action, hence the potential for a short position to work well.
The case looks even more compelling within the larger context of the strong 0.67 resistance on the daily chart (which is why we looked at it first). The potential bearish break of this channel will effectively also confirm that the 0.67 resistance is holding (our first condition for the trade).
Additionally, for the entry trigger, you can also look for NZDUSD to break below the 0.67 level as a final confirmation that momentum has shifted bearish. This is where currently the most recent swing low stands (see below).
Finally, note that the conditions for this trade are currently not met at the time of writing this (on Friday afternoon).
Entry:
- Look to enter short after a bearish break of the ascending channel (1h chart) and NZDUSD moves below 0.67
Stop:
- Above the previous swing high (currently that is 0.6730)
Targets:
- 1st - 0.66 zone
- 2nd - 0.6540-0.6550 zone (January lows)
- 3rd - 0.64 zone and below (more distant target, but could come into focus if risk aversion worsens badly).
The Volatility Edition: How to Battle Inflation
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Trade signals from the past weeks
- January 26, 2022 – Long USDCAD from 1.26, stop moved to around breakeven at just below 1.26 (open & in progress; trade idea sent on Jan 21)
TOTAL: 0 pips in the past week
TOTAL: +5155 pips profit since October 1, 2018
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Thank you!
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High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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