NZDUSD: Bearish below 0.6350 area
Yesterday’s signals would have produced a losing short trade from the rejection of the resistance level identified at 0.6357.
Today’s NZD/USD Signals
Risk 0.50%.
Trades must be entered between 8am New York time Wednesday and 5pm Tokyo time Thursday.
Short Trade Idea
Short entry following bearish price action on the H1 time frame immediately upon the next touch of 0.6386.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
Long Trade Idea
Long entry following bullish price action on the H1 time frame immediately upon the next touch of 0.6315.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
NZD/USD Analysis
I wrote yesterday that the price action now was broadly bearish and the break below the 0.6350 area showed that further downwards movement was more likely. I was prepared to take a bearish bias if we had gotten another bearish rejection of the 0.6357 level later.
This was a poor call as although the 0.6357 level initially held, it was quickly broken to the upside.
Although there has been bullish directional action in the usually highly positively correlated AUD/USD currency pair, the NZD/USD currency pair is just consolidating, making higher lows and lower highs over recent hours. The resistant area at 0.6357 has been invalidated.
We are unlikely to get any meaningful price movement until the important USD releases due later today, so the USD should drive any movement. A strong USD will probably be felt most in the USD/JPY pair while a weak USD should impact AUD/USD mar more than it would be felt here.
For these reasons, it is probably worth avoiding trading this currency pair today, but if you are going to trade it, fading a strong spike down to 0.6315 with a long entry from there would probably be the best opportunity that might set up after the FOMC release.
Regarding the USD, there will be releases of ADP Non-Farm Employment Change data at 12:15pm London time, followed by Advance GDP at 12:30pm, and the FOMC Statement / Federal Funds Rate at 6pm then the usual press conference half an hour later. Concerning the NZD, there will be a release of ANZ Business Confidence data at 12am.