A bearish swing trading opportunity has been identified for NZD/USD. I’m anticipating a pretty hefty drop from current market levels, so read on to find out why, and how you can profit from the move as well. As always I will carry out a top-down approach to my analysis.
Straight away the monthly chart provides us with some very important and currently relevant levels. An ascending trend line was broken back in August which has just now come in for the retest, which lines up perfectly with a shorter-term descending TL. With ascending structure broken and this 2 TL confluence region in place, downside is anticipated as our overall direction.
Scaling down onto the Weekly chart shows the clear confluence region. When we draw on our fibonacci tool from the high to the low of the most recent swing move we can see the 71.8% fibonacci reversal level holding just above price.
The daily chart is where things get interesting – we have a clear view of confluences & target areas now.
Starting off we can see Friday’s daily candle closed up as a strong bear pin bar with big wick rejections to the upside, a great indication that bullish momentum is dying down. We can also see a nice clear supply zone from a daily doji candle lining up with our confluence region, liquidity looks to hold strong within this zone which is indicated by last Friday’s large wick.
Targets run down to the major demand zone that we can see in place around 0.64500. This gives us a +170 pip run to the downside if all goes to plan.
Our Entry | Hourly Chart
Our entry point is found on the hourly chart. By scaling down to the 60 minute timeframe NZD/USD presents a nice Head & Shoulders reversal pattern. I have once again utilised the 71.8% fibonacci level here as a confluence for a pin-point entry.
Trade Safe & Manage Risk.
This trade was identified using my own personal trading strategy. If you decide to follow my analysis and trade this setup then make sure you manage risk effectively.
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