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EURNZD Reaches Confluence of Resistance at 1.7030/80

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The EURNZD just reached a significant area at 1.7030/80. Not only is it the 2007 low (1.7028), but it’s also ascending channel resistance that extends from the May 2017 high.

To be fair, it isn’t technically a channel just yet. To be one, we need at least two swing points on either side. The February and June lows satisfy that requirement for support, but we don’t yet have a second swing point for resistance.

Whether or not we get one over the next few sessions is anyone’s guess. But regardless of what happens, this is one of my favorite ways to find support and resistance levels. Visit the lesson on finding ‘hidden’ levels to learn about this technique.

More often than not, drawing a channel early like this will expose other critical areas. In the case of the EURNZD, that area is the 2007 low at 1.7028. At the time of this writing, buyers have carved an intraday high of 1.7066.

It’s no secret that the Euro cross is trending higher. It has been since February of this year. With this in mind, I won’t entertain a short entry without a proper sell signal such as a bearish pin bar or rejection candle.

An alternate approach is to wait for a daily close below the trend line that extends from the June 27 low. Such a break would expose ascending channel support from the February low.

The bottom line is that I’m in no hurry to short the EURNZD. While I’m not opposed to going against the grain (some of my best trades have been counter-trend ideas), I do need a valid reason to do so.

And so far, nothing indicates that it’s worth the risk. That’s particularly true given recent New Zealand dollar weakness.

If the EURNZD closes above the confluence of resistance near 1.7030/80, I will not entertain a long position. I have a rule that I don’t buy upside breaks of ascending channels, nor do I sell downside breaks of descending channels. Those scenarios often result in false breaks.

I’m going to remain on the sideline to see how this plays out. A bearish candlestick pattern from the 1.7030/80 area would pique my interest. A daily close below trend line support from the June 27 low would also be appealing.

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EURNZD ascending channel on the daily chart

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14 comments
Jang says

https://www.tradingview.com/x/MP9VVDYI/, NZD is really weak compare to Eur, given the Inverted HS, my hunch about 70% it breaks through to orange zone, gradually

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Sherman Niamehr says

Hey Justin. I was a stockbroker in NY for 19 years. Now I’m in the FX market cause back then there was too much regulation etc. so I dipped my toes in the fx mkt. for a couple of years now, I was trading demo. Then 3 months ago I opened up a live account with just under 60k. Now I’m down to 9k. I really was under the impression that it was like the NYSE or nasq but it’s not. I lost it almost all now. What the hell am I doing wrong man. I buy high and sell low majority of the time. I have like another 50-60k to put in but I want to make sure this time I will make money.

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    Howard says

    I suggest definitely stay on demo until you can trade well consistently. Then start real account very small, gradually building up as you continue to trade well. Be very careful with size and leverage. Just 1 or 2 mistakes trading large size can quickly reduce your account sizably.

    Reply
    Mark says

    Ask before him to show you his trading statment

    Reply
Sherman Niamehr says

So I was looking for some advice on what to do. Your the only one out of like 3 dozen blogs and emails that I don’t just delete for some reason. You make sense to me somehow. If u could help me out I would appreciate it. I have a family and can’t afford to loose this money also 😅

Reply
    Justin Bennett says

    Thanks for not deleting my emails. As for your question, it’s impossible to know what you might be doing wrong without knowing the specifics. That said, if you’re trading with money you can’t afford to lose, that’s the first issue I would address.

    The second thing I would do is take a break from trading. When you come back, reduce your risk and trade less frequently. To lose that amount of money in three months tells me that you’re either overtrading, risking too much, or both.

    Outside of that, this website is full of content to point you in the right direction. Have you watched the webinar? https://dailypriceaction.com.

    Reply
UzairWada says

Well i don’t have experience in Stocks but i must say there is big difference between Fx and Stocks.
Just flip your Trading sense Simply “Buy low and Sell High”.
But it’s not as simple as ABC you need to Work hard to reach at this level of Trading, In my opinion donot open Live account until you doubled your Capital on demo with the risk of 2% per Trade.
Forget your loss do not try to take revenge from market, Try to move up slowly you’ll soon cover it all.
Happy Trading. 🙂

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Carol Capner says

Perfect

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Roy says

If price moves up and retests that 2007 low, it would be a favorable oppurtunity to go long. Plus price is quite away from the moving averages. Patience is key here as always.
Thank you Justin for your honest analysis.

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    Justin Bennett says

    Sure thing, Roy. Cheers.

    Reply
Melchizedek says

I’ve already taken out $7,300 on 1 std lot, and plan on riding it all the way up to over 1.8, so good luck but don’t wait too long!

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Nathanael says

Hi Justin

Im 19 years old.I started learning forex trading since last year August,i have lost alot and decided to hit demo again. One of the traders helped me and ofcourse your posts have been mostly helpful

Everytime i thought i got my strategy right you would find that at a certain point it doesnt work.

Been on demo since May this year. Now i have a working strategy that i feel confident with and works very well although it might appear once or twice in a week. Sometimes i get impatient and try something new and fails.

Now here is my point i live in South Africa and i have never came across any profitable trader. Im worried because i dropped out of school and left everything for trading. Please give me an advice.am i safe in this? How long did it take you to be a profitable trader?

Reply
Howard says

Definitely stay in school as you build a foundation for a career. But continue to hone your trade- craft on demo account, if you are passionate about trading. Big patience needed. Don’t expect easy money from forex. It really does take years and there is no magic indicator. The holy grail is your understanding and emotional maturity. Profitability is gradual & is very much based on your ability to read & respond to the charts in the correct way, and to manage your account well.

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    Anetor E.K says

    Well Said Howard…..Thanks Justin for this Analysis.

    Reply
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