About Pick of the Day

Each day, I will try to find what I believe is the best looking short term trade setup for the upcoming trading day or week. If you're a forex newbie, it can be tricky in the beginning trying to figure out how to look at charts and draw lines. My goal is help you understand the psychology of price movements so you can learn to analyze your own charts and trade on your very own. I will post my ideas and/or reviews through out each session right here, on Twitter and on Facebook.

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Pick of the Day: NZD/USD

Posted 21:59 24 January 2006 | Comments

Here's my pick of the day. Let's take a look at the hourly chart for NZDUSD:

As you can see, with NZDUSD having trouble breaking above the 100 SMA to the upside and the pair in a downtrend, we're going to look for a short trade.

We are looking to go short at 0.6813 with an initial profit target of 10 pips below at 0.6803. Our stop is going to be approximately 10 pips above the 100 SMA.

I wouldn't set it more than 30 pips above your entry. Our aggressive target is at the S1 line; 0.6777. Now, if the pair breaks above the 200 SMA, look for a long trade above the R1 line.

On a side economic note, RBNZ Official Cash Rate is coming out at 3:00 pm EST with a consensus at 7.25%. I would take the trade off a little bit before this time to avoid possible volatility if the number is a surprise.