16 Jan Chart Pattern Observation: NZD USD
With the U.S Markets closed today for MLK day volumes have been low and there really isn’t anything substantial going on in any of the Indices or Forex Markets I watch.
All existing set-ups detailed here over the last fortnight are either still in play or their respective moves are in progress. In fact, I wish I took some more of those trades because some have performed particularly well.
Scanning through the chart list I thought I’d revisit NZD:USD because a couple of things do stand out on the chart beyond what was previously discussed in this post where the projected move is still underway, albeit I was too uncertain to take the trade myself.
Firstly it’s interesting that price has been moving in accordance with Fibonacci levels where each 61.8% fib retrace has been sold into. It’s also interesting that each occurrence of this repeating pattern has taken longer than the previous move. This could just be related to lower seasonal volumes creating time lags or it could be something else that I can’t quite put my finger on right now. The chart explains:
Cleaning up the chart and looking further we can see that price broke out of a bullish falling wedge after a period where MACD produced powerful positive divergence on the daily time frame. The break was subsequently back tested and support was offered (red circle). In fact that back test was a little too easy to trade and we all know that “easy” and “trading” don’t fit particularly well in the same sentence. In my attempt to predict the future based on an ideal trade-able scenario I’ve put together the following projection which I’ll almost certainly look to trade short if price reaches the 200 MA and starts to roll over following some consolidation at that level. The obvious target would be a 2nd deeper back test of the original falling wedge from where further decisions can be made as to the likely direction….. If it looks like holding then we could well go back up, otherwise that unfilled gap near the lows makes for a very attractive downside target.
All in all from a technical perspective it appears to be a currency pair that in recent times obeys technical rules and this makes it a nice and safe pair to swing trade.