Forex Trade Idea: NZD/USD Falling Channel

Bahh, it looks like my latest GBP/CAD short forex trade idea ain’t showing any confirmation signals yet so I’ve decided to hunt for other comdoll setups. Here’s what I found on NZD/USD.

NZD/USD 4-hour Forex Chart

NZD/USD 4-hour Forex Chart

A descending trend channel is forming on the pair’s 4-hour forex chart and price is on its way to test the top. I’m inclined to think that this area might hold as resistance, as it lines up with the .7900 major psychological handle.

Stochastic is still moving north, which means that there’s enough bullish momentum to trigger an actual test of the channel resistance. I’ll be waiting for confirmation from the oscillator and reversal candlesticks before shorting, but I plan to set a wide stop past the .8000 handle and aim for the bottom of the channel at .7500.

In terms of fundamentals, I think this pair’s downtrend could resume since New Zealand is in a weaker spot compared to the U.S. economy. Although the pair surged higher after RBNZ Governor Wheeler mentioned that they’re keeping close tabs on housing inflation, I doubt that the New Zealand central bank is ready to hike interest rates anytime soon… at least not before the Fed does anyway.

What do you think of this setup? As always, I’d love to get your feedback on this!

Cheers,

Happy time

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  • ForExchange

    Hi Happy Pip,

    well the reasoning is good and the upward movement stoped already. I do not know if you already entered or not but the reward to risk ratio looks good as the SL is not far this time. I think the entry you can get here has also less risk than in some other setups.

    BTW have you seen the huge GBP/NZD downward movement?

    FE

  • PipMeHappy

    Hello HappyPip, I have been shorting the NZD/USD for many months, and the last trade I have opened is still ongoing (from 19th Nov.); I think

    along your lines, although I am actually trading this down from higher up

    than your targeted entry point (the 0.79 channel top). I discuss this and more on this thread:

    http://forums.babypips.com/forextown/66260-brief-share-questions-around-volume-any-contribution-welcome-69.html

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