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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
On July 29th, I wrote about an NZDUSD short opportunity.
The pair was in the process of breaking below ascending channel support near 0.6630.
Our target for that breakdown was 0.6490.
Notice how today’s session has reached a low of 0.6488. Furthermore, the pair has rallied off that low quite aggressively.
With our profit of 130 pips now booked, it’s time to start thinking about where NZDUSD might go from here.
We know 0.6490 is key support.
Between the lows in May and June and today’s bounce, there’s no doubt that this area is attracting buyers.
But what about resistance?
That’s a little trickier to identify, in my opinion.
Sometimes the best way to determine a level in sideways price action like this is to take a look at the weekly time frame.
If you do that, you will quickly notice the January low and April 24th closing price of 0.6590.
Beyond that we have the 0.6660 resistance area.
So with that in mind, should you be a buyer or seller?
I can’t decide for you, but I can tell you that I’m still interested in selling the pair, but only at higher prices.
I have no interest in selling NZDUSD down here as the risk to reward ratio is less than favorable. I also think we could see further gains from the 0.6490 support area.
If the channel that formed in June and July is a continuation pattern, we could see more downside toward the 0.6350 region.
But again, I think we’re in for a rally before that scenario unfolds.
And if that 0.6590 resistance area doesn’t trigger a bearish price action signal, I will look to the 0.6660 region.
I’m in no hurry to trade NZDUSD again, so I’m okay giving the pair some time to retrace this latest selloff.
Key support on the way down includes 0.6490, 0.6420 and 0.6350.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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