The Daily Trade – Day 52

Filed under: Learn Forex Trading |

Trade Number 52 – NZD/USD 1-Hour Chart

Well, it has been a tremendous week on the NZD/USD chart. We have already had two successful trades this week on the 4-Hour and 1-Hour charts at the same support/resistance level, and we have yet another trade setup today.

 

Figure 1.

Although we’ve already looked at it twice this week, take another look at the daily chart just to remind you of the scenario (see Figure 1). We have this lovely strong area of support/resistance that price keeps reacting to. It first formed as support in April of this year and since then there has been a change of polarity, and that support became new resistance. Price has been reacting to this resistance almost every time there is a significant pullback in the uptrend, which is four or five times in the past six months. There has already been one very recent bounce, and today, we are back at that level again.

The 1-hour chart (see Figure 2) shows that a nice bullish engulfing pattern formed once again at this zone, which is a good setup to get in on a long trade. The stop loss (and you should always have a stop loss to protect your bank) should be just a few pips below the low of the move. The target on this occasion should be at least two times your risk, but I would go for three or four times the risk, given that there is not much of a resistance area above this.

 

Figure 3.

Now take a look at Figure 3 and you will see that price did indeed react to this zone once again and you could easily have made a 4% rise on your bank with a risk-reward of 1:4. There have been lots of good setups on this pair recently – so keep a close eye on it. I’ll be back tomorrow with more. See you then.

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