Forex EURNZD Double top entry. May 20th 2018
So if we start on the monthly chart we can build the story of how price action has been moving over the years.
Straight away I can see that that the 1.7000 zone has been a huge support and resistance level from 2005 right up to the current year 2018.
More recently, from 2013, we can see that price has started to form a huge head and shoulders pattern, with the right shoulder currently forming. This isn’t the basis for my trade, but its critical to gain higher timeframe perspective of price movement.
If we move down to the weekly chart, we can see that price has been creeping towards the 2017 high at the one point 7 300s level – and has rejected a number of times. We’ve also been respecting an ascending trend-line which started to form in January of 2017. To this day, that hasn’t been violated.
From the daily chart, price has been ranging since the beginning of the year with no real directional movement – or trend.
We’ve seen price retrace back to the trend line and the 200 ema which was a springboard for a bullish run, only to be rejected at the key resistance level. The last piece of the puzzle for me is price once again making higher ground to re-test this level – with price deceleration and a doji candle forming. Now, I don’t just take a trade based off of this, there are additional factors that I take into consideration – one being bearish divergence on the MACD. This gives us a very high probability of lower prices.
Stops above the high of the doji and targets at a re-test of the 50ema. For me, this was A gain of 3.5%
If we can break and close below the 1.69700 level, I anticipate price making its way back to test the trend line once again and the 200 ema, which on the weekly chart is where the 20 ema is currently sitting.
This is my analysis for Forex EURNZD. Thanks for reading.