Live Trade Setup – NZD/USD

Filed under: Live Trades |

I have an order placed on the NZD/USD pair at the moment, and I would like to talk you through the ins and outs of this setup, and my thought process in placing the trade order, right now.

 

Figure 1.

Figure 1.

To begin with, take a good look at Figure 1. This is the daily chart for the NZD/USD pair, and it is the only chart that we will need to look at for this particular pair as all the data that we need is contained within this chart. What you can see here is that recently, the pair has become bearish, with the 8-day exponential moving average crossed below the 21-day exponential moving average. You can also visibly see that the pair has started to move downwards with a few long black bear candles in particular standing out. I have also marked in a very significant level of support/resistance (marked with a horizontal green band), which if you zoom out a little on your charting software, you will see that this level has been valid for quite a significant period of time (around three months). Therefore, I had been keeping a close eye on this level and looking out for any bearish price action signals to confirm that the support/resistance level would hold.

 

As you can see, a nice bearish pin bar formed with a long upper shadow. This shows that the level of support/resistance was penetrated, but price could not close above it and as such, the level held and is still relevant. What this means is that the odds of probability would be in our favour in a short trade, as the level of support/resistance is less unlikely to be broken. Therefore, at the close of the pin bar, I put an order in to go short at a 50% retracement of the pin bar, with a stop loss placed just a few pips above the high of the pin bar, and a target set of two times the risk. This order was within just a few pips of being filled, but price has since moved down again, so it is looking less likely that this order will now be filled. However, we will wait and see what happens with this over the next few hours.

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