NZDUSD: Bullish flag pattern about to break down?
Last Thursday’s signals produced a profitable short trade from the bullish reversal at 0.6433.
Today’s NZD/USD Signals
Risk 0.50%.
Trades may only be entered from 8am New York time Monday until 5pm Tokyo time Tuesday.
Short Trade Ideas
⦁ Short entry following bearish price action on the H1 time frame immediately upon the next touch of 0.6435 or 0.6475.
⦁ 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 0.6344.
⦁ 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 last Thursday that we had a weak bullish flag pattern but the resistance level at 0.6433 had continued to successfully hold the price and act as resistance. I wanted to see the price spend two hours later above 0.6440, this would be a bullish sign of a likely move up to 0.6475 or even 0.6500.
I was wrong to look to the bullish side but right about the importance of 0.6433 which held. The recent price action looks a little bearish, but the bullish flag pattern marked by trend lines is still holding, as shown in the price chart below.
I would be prepared to take a short trade entry from a bearish reversal at 0.6435, or if there is a strong bearish breakdown below the lower trend line, as the price has a lot of room to fall from there. Another bearish factor is the divergence between the NZD and the AUD, with the AUD weak, so the NZD may fall to converge with it. I am looking for a short trade entry today here.
There is nothing of high importance due today concerning either the NZD or the USD