Daily Price Action
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Price Action Setups: EURUSD, EURJPY and NZDUSD

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On Friday I tweeted about this short-term support level on EURUSD. While the support level held throughout the day, I do think the pair’s failure to close considerably higher gives reason to believe that we may see a retest of 1.36 before a larger rally can take place.

The large bullish pin bar on the weekly chart leads me to the same conclusion. The 50% retrace of this pin bar comes in at 1.3588. A large pin bar like this on a higher time frame usually results in a partial retracement before a larger move takes place.

I’ve outlined the resistance areas to keep an eye on below. The nice thing about EURUSD is that because it’s so liquid, these key levels often line up with Fibonacci levels, which is the case here when using the high from May 8th and the low from June 5th.

Although the first resistance level comes in at 1.369, I do think a larger rally to 1.375 and possibly 1.38 may be in the cards.

eurusd daily forex chart

As we’d expect based on EURUSD’s bullish price action, EURJPY is also starting to grow some legs. The pair formed a large bullish pin bar on Thursday followed by an inside bar on Friday.

Anyone looking to trade this setup should keep two things in mind:

  1. The 140 level has been a key level for some time now. This is the level that capped the market’s attempts at a rally last week. I do believe the pair stands a good chance of breaking out in the coming week, but just keep in mind that there’s a greater chance of a false break when trading into a key level like this.
  2. If targeting the 141 resistance level and placing your stop loss behind the inside bar’s low, this isn’t an ideal risk to reward ratio. In fact it’s about 1:1. In situations like this moving your stop loss to 50% after a daily close above 140 can be a great way to limit your risk.

All in all I think this is a good setup, but one that does come with a couple caveats.

eurjpy daily forex chart

NZDUSD put in a bearish pin bar after failing to close above resistance at .8523. Based on this formation and the recent bearish trend, we may see a retest of the .84 level in the coming week.

The only thing that would’ve made this setup that much better would have been more time between the recent low at .840 and Friday’s pin bar. Thursday’s strong rally raises some questions as to whether or not Friday’s bearish setup will actually play out.

Still, I think this is one of the better setups going into next week.

nzdusd forex daily chart

Although I do think NZDUSD has topped, I won’t be fully convinced that we’re in a bear market until the pair is able to break trend line support as illustrated below.

nzdusd forex daily chart

Leave a Comment:

8 comments
Colin says

I really like the nzd/usd idea – that looks like it could be solid. Time will tell.

Reply
    Justin Bennett says

    I too like the NZDUSD pin bar. It’s a solid setup that could work out nicely with a 50% entry. We’ll see.

    Reply
      Robert says

      Hi I am new here. I am surprised that the pin bars on 6/06/01/ and 6/029/14 were not true pin bars. Would you kindly explain why this happened? Thank you.

      Reply
        Justin Bennett says

        Hi Robert, I’m not sure which pin bars you’re referring to. What were the dates?

        Reply
          Robert says

          My apologies. June 6, 2014 and June 9, 2014. Thank you.

          Reply
          Justin Bennett says

          The best explanation I can give is that although the NZDUSD pin bar on June 6th was well-formed, the pair still had bullish moment going into the weekend. If you notice on the weekly chart, the pair was still trending up (higher highs and higher lows along with the 10 and 20 MAs crossed over)

          That’s why I mentioned above: “The only thing that would’ve made this setup that much better would have been more time between the recent low at .840 and Friday’s pin bar. Thursday’s strong rally raises some questions as to whether or not Friday’s bearish setup will actually play out.”

          Typically it’s best to see more time and space before a retest of a key level like this. It gives the market time to “reset” before the next move. In the case of this setup the market retested the .8520 level within 48 hours from the swing low (.840)

          See the attached weekly chart for clarification. Hope that helps.

          Reply
          Spiral says

          Thank you for your kind posts and explanations.In this situation which we want to trade counter trend i think it’s helpful to wait to break the low of pin bar.you see we have 3 pin bars in 6,9,11th this month.In 6th and 9th the low of pin doesn’t break and the third pin just has a little break through the low.I think if we wait for break of low of the pin bar and then we can see at least 3 hours trading below it then we can make sure of setup.(Of course in this way we will have a looser SL)
          Best regards

          Reply
          Justin Bennett says

          Yep, waiting for a break of the pin bar nose is certainly an option. I tend to either get in at market or 50% on most of the pin bar setups I take. It’s just my preference of course.

          Reply
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