Price Action Setups: NZDUSD Critical Support Broken

A lot of great price action today in the Forex market. There are several setups to talk about so let’s dive right in…

NZDUSD finally broke down today, closing below the .8520 level. We’ve been watching this one for a while now.

From here I think we could see the market retrace to test the underside of this level as resistance before continuing lower. In fact this is the only way I’ll play this kind of break. Be sure to check out the 4 hour chart of NZDUSD below for more on this.

NZDUSD 4 hour chart. I’m not a huge fan of Fibonacci retracements, but I do sometimes use them to add further confluence to a trade setup. Notice how the 50% fib level lines up perfectly with the .8520 level we’ve been watching. The swing high at 1.8578 was used to draw the fib.

While we’re talking about breakouts, we mine as well look at GBPUSD. The pair broke trend line support yesterday and today broke another key support level at 1.6760.

This is another case where we could see the market retrace back to former support (now resistance) before continuing lower.

I mentioned in yesterday’s post that USDCAD looked as though it was basing for a move higher. Today we saw the pair not only move higher, but break the trend line resistance as outlined on the 4 hour chart below. There are still a lot of question marks, but if these wedge breaks are any indication we could see a more substantial move in the coming days.

These wedge breaks are a little “trick” that I use. Any time you see a potential setup on the daily chart, you can often move down to the 4 hour and look for wedges such as this. For whatever reason USDCAD loves to form these patterns. It can be especially powerful during strong trends, as the breaks from these wedges can often result in aggressive moves.

If USDCAD is to move higher, we may see price action move sideways for a bit before gathering enough steam for the next leg up. We’ll see what the next 24 hours brings.

The next resistance level is extremely well-defined at 1.094, giving a clear target for longs.

I’m not overly confident of Aussie Dollar longs at the moment, but the AUDCAD bullish pin bar today is worth mentioning. This pair loves to move between levels, so I wouldn’t be surprised to see a test of 1.015 before continuing lower.

A bullish pin bar can also be seen at this same level on the 4 hour chart.

Last but not least AUDJPY, which we’ve been following since this post on May 21st. Yesterday we saw the pair put in a high just where we thought it would – around the 94.55 level.

Current price action is best seen on the 4 hour chart. If the market is to continue lower, we should see resistance at 94.07 hold on a daily basis.