NZDUSD got stopped out at 0.7108. As mentioned, this is a trade which is against general trend. Similarly, NZDJPY moved up slighly but retraced when price reached overhead resistance.
NZDUSD seems to have completed 5th wave structure. Price broke above medium term downward trend line. On 4h NZDUSD and NZDJPY, we observe bullish engulfing candle patterns. In 30mins NZDUSD, price is supported by short term upward trend line and we identified pin bar signal for entry. We went long at 0.7137, stop loss 0.71080, take profit 0.7198, risk reward 2. Please take note that this is a counter trend move, hence we need to keep take profit level reasonable.
This trade was stopped out since direction and momentum are not in our favor yet. To increase the probability of success, we should have waited for lower low to be identified before entering this trade.
Our trade idea is to short NZDUSD at 0.7089, stop loss 0.7113, take profit 7005, risk reward 3.5. The fundamental rationale for this trade is due to USD strength and NZD possible weakness which may arise from the small possibility of RBNZ lowering rate during the release of rate decision this Thursday. From technical perspective, 0.71 level and short term downward trend line are working as resistance at the moment. Entry is given from reversal signal. However, price has yet to make lower low and there may be a small risk for entering this position.
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