NZDUSD analysis: New support at 0.6520
Yesterday’s signals were not triggered, as the price action at 0.6528 was insufficiently bearish.
Today’s NZD/USD Signals
Risk 0.75%.
Trades must be entered from 8am New York time Wednesday until 5pm Tokyo time Thursday.
Short Trade
Go short following bearish price action on the H1 time frame immediately upon the next touch of 0.6558.
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
Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.6519.
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 action had firmed up above 0.6450 so I was correct not to be unconditionally bearish. I thought that the best approach here was to wait and see for the time being. A failure to break above 0.6528 could see a resumption of the bearish trend.
This was a good call as 0.6528 was a pivotal point and the price broke above it and invalidated the level. We now see new higher support formed at 0.6520 which seems to have held the price up so far. Therefore, it will be wise to be very cautious here before making trades in either direction. I would take a bearish bias if we get a solid bearish break below 0.6500, but only after the FOMC release due later. The AUD is more bearish than the NZD, so it may be wise to use the highly correlated AUD/USD currency pair for shorting than this pair. There is also a better swap differential on short AUD/USD than on NZD/USD.
Concerning the USD, there will be releases of the FOMC Economic Projections, FOMC Statement, and Federal Funds Rate at 7pm London time, followed half an hour later by the usual press conference. Regarding the NZD, there will be a release of GDP data at 11:45pm.