Hello Forex Traders!
Hope you enjoyed yesterday’s bullish day on the EURUSD, which we mentioned in Monday’s article “EURUSD upside continuation.” For the moment I am still expecting a break of the 1.32 top on that currency pair. Let’s see if that indeed were to happen sometime this week.
Today we are going to show you a couple of interesting currencies which might be at BOUNCE or BREAK spots. Keeping an eye out on these currency pairs might be wise.
Oh, and just in case you missed yesterday’s article on a couple of Forex Opportunities, here is the link to that post.
The EURNZD daily chart is an interesting situation, primarily because of the following reasons:
1) The oscillator is back to the 0 line. This indicates that the minimum retracement on this time frame has been completed.
2) The oscillator peak is high. Therefore the currency could now make another wave up to break the top and create divergence between the 2 tops.
3) The oscillator peak is either a wave 3 or wave C. Considering the strength of the momentum, a wave 3 currently seems more likely than a wave C, therefore increasing the odds that this pullback could be a wave 4, with wave 5 remaining.
4) The currency pair has broken out of the corrective trend line (orange).
5) When placing a Fibonacci retracement tool on the huge move up, the EURNZD stopped in between the 382 and 500 Fib, which is usual and typical for a wave 4 correction.
CRITICAL AND INVALIDATION LEVELS
The critical level is the 500 Fib at 1.6172. If price were to clearly break through that price zone, then the chances of this being a wave 1-2-3-4-5 setup is decreasing and just maybe the movement was a correction. The real invalidation levels are the top of wave 1 at 1.5610 and the bottom of wave 3 at 1.5240.
For now, I would still assume that this is a wave 4 and one more push to break the top is likely. A good indication and confirmation of the start of wave 5 is when the EURNZD were to break above a daily fractal for example. The target, for now, is at the -0.272 Fibonacci level at 1.7618.
This currency pair has made tremendous downside, just like any other Forex pair which has Aussie in part of it.
What I find interesting about this particular pair are the trend lines. Let us walk through them one by one and see if we can discover particular interesting setups.
1) Orange line: indicates the slope of the down trend so far. Price so far has only managed to breach or pierce through the line once. Price is currently very close it right now.
2) Dark green line: indicates a milder slope and incorporates the broken price action. Could be a useful resistance line if price were to break above dark green and red.
3) Red line: major and key resistance.
4) Light green line: the bottom of the down trend channel which has been a great indication when the currency pair has reached an oversold position.
5) Purple lines: indicating a short-term wedge.
In my opinion the best opportunity for this pair would be a break of the wedge to the downside, back to the bottom of the trend line (light green line). This is a trade with the trend, which is always best.
If price were able to break above the red and orange line, then there could be a trade to the upside and back to the shallower trend line (dark green).
Do you like the AUDNZD setup in both directions? Or only 1 of the 2 sides? Let us know in the comment section down below!
Last but not least, the Aussie Dollar versus the U.S. Dollar. Let us start this section with the wise words and wisdom: when a strong trend is in play, never underestimate the power of the currency.
Over and over again that lesson keeps us from losing (too) much money on a too early trend reversal speculation trade, and hopefully enables us to ride the trend longer for more profit. It is a difficult balance to maintain: focus on the trend continuation or anticipate a trend reversal / bigger pullback. I am sure many traders have lost lots of cash in an attempt to try to catch the AUDUSD to the upside. Identifying and, moreover, focusing on trading with the trend is not an easy task to complete.
The AUDUSD has definitely proven that wisdom in its recent price action. But even the AUDUSD will eventually reach the end of its wave 3. The only questions are when and where.
Now the AUDUSD is back to a talking spot. The Aussie is right back and resistance. The options:
1) Yet another move down and trend continuation
2) A break of the resistance levels at 0.9300 – 0.9340.
Although I always want to focus on trading with the trend, I do think that in this case the likelihood of wave 3 finishing here or sometime soon are increasing.
If wave 3 were to indeed finish, then the currency pair will enter the phase of wave 4, which could be a long and slow correction (which would fit the summer environment). Typically these corrections go to the 382 Fibonacci retracement level, which is at 0.9605.
The next anticipated move after completion of wave 4 would be another move down from there to break the current bottom at 0.90 and move to hit the targets at the -0.272 (0.8571) and the -0.618 (0.8025) for wave 5.
Always thanks for reading and for the article sharing!!
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There is 1 thing I wanted to ask you, what currencies are you planning to trade today or this week? Please leave a comment down below, would love to hear from you!
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