NZD/USD Resistance at .8400

Thanks to Big Pippin’s Daily Chart Art for today, I’ve got a comdoll trade idea for this week! He pointed out that NZD/USD has been stuck in a range for quite some time already and looks ready to test the top.

nzdusd

The pair has found support at the .8100 major psychological handle and resistance at the .8400 mark. I’m thinking the recent run in risk appetite spurred by Yellen’s testimony in front of Congress could push the pair closer to the top of the range before stochastic heads lower and puts Kiwi bears in control.

If I’m able to short around .8400, I plan on putting a tight 50-pip stop just above the top of the range. I’ll aim for support at .8100 if risk aversion pops back in the markets but I’ll move my stop to entry once price hits the middle of the range. Let me know what you think of this idea!

Cheers,

Happy time

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  • Russell Daily

    I’m long Nzd/Usd with 8400 as my target. Then probably a short as suggested.

    • Happy Pip

      At what price were you able to jump in? Looks like it’s retreating at the moment, possibly an effect of Australia’s weak jobs release. I’m hoping it’ll reach .8400 too!

  • Kieran T

    It looks like there is a classic 3 drive setting up to take it up to the 839 level so I think that will take the price down to a level where you can at least adjust your stop loss and improve R:R.

    • Happy Pip

      Thanks for sharing this! I’ve still got my fingers crossed that it reaches the .8400 area but it looks like the weak Aus jobs data is weighing it down. Do you think the selloff is starting or should I just sit tight and wait for it to test the top of the range?

  • Excellent strategy. NZDUSD seems anyway limited to the upside. I assume volatility in forex and stock markets will kick in soon and S&P 500 and Dow Jones will come down which will drag down the commodity currencies as well.

    • Happy Pip

      Thanks for sharing your thoughts! Yeah I’ve been waiting for that uncertainty to kick in too, after reading a lot about the outlook for emerging markets and commodities. Do you think this strategy will start playing out next week?

      • I am not sure if we are already stalling out at 0.84. I think the next trading days with S & P 500 near the all-time high will be critical for commodity currencies. If voladilty kicks into equities I see great potential for NZD/USD to the downside.

  • John

    I agree. This looks like it could work out nicely.

    • Happy Pip

      Thanks for sharing your thoughts! I’m tempted to short now since NZ quarterly retail sales came in very weak. Think I should still wait for .8400?

      • I am not sure if this was already the last time NZD/USD was rejected at the upper limit of the trading range which is about 0.8500 but from a risk/reward perspective to me it looks a great short trade now. Another option would be to wait until 0.8080 is broken and enter the short trade after a retest from the down side.

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