04 Dec NZD CHF Gaps Into Major Resistance For Short Entry
Here is a potential trade that looks directly at the opposite view to that given in the previous post which had a bearish CHF theme. So, one of the 2 trading ideas will almost certainly fail, yet both have good technicals supporting the respective future directions.
NZD:CHF opened tonight with a gap up and small rally straight into powerful resistance.
In particular I’m attracted to the short side based on the very tight stops that can be run from here – A daily close above this resistance invalidates the trade.
I’ve already entered short in anticipation of the current hourly candle closing as a bearish engulfing.
The following daily chart signifies the relevance of this resistance in the 0.7202 region:
An ideal downside target would be the gap fill at 0.6880 which is just over 300 points South of the current print. Stop loss to be placed above the 0.7202 area however this stop loss can be as tight or as loose as you need it to be based on your conviction of the trade playing out. I’ll probably look to stop out my position on any hourly candle close above 0.7232 which is 30 points above the resistance. A daily close above 0.7202 would probably be enough in itself to have me out of the position.
Hourly chart showing potential bearish engulfing from resistance and MACD negative divergence: