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NZDUSD is continuing to react to former trend line support from November of 2011. The pair recently broke this long-term support level on September 26th and has been consolidating below the level since that time.
Today the market put in a bearish rejection bar as it was unable to find the demand necessary to close above .7915 area. Also of note is the fact that the 10 EMA has been acting as dynamic resistance since August. The pair was able to breach the 10 EMA yesterday but quickly fell back below it today.
There’s two ways to play this from here. The more aggressive approach is to look for a short entry on a bounce back to the .790 area with a stop above today’s high. The more conservative approach involves waiting for a close below range lows around .770.
I do think that this market is in the process of forming a major top, so the downside potential is still significant even if you decide to play it safe and enter on a break of range lows.
NZDUSD weekly chart
Summary: Potential to look for a short entry around .790 or wait for a break of range lows to enter short. Key support comes in at .7470 and .7320.
AUDCAD weekly chart
AUDCAD 4 hour chart
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