NZDUSD: Short Term Uptrend encounters Short Term Resistance
The daily candle chart below shows the medium term price history of the New Zealand Dollar (NZD) versus the United States Dollar (USD), known as NZDUSD, and trading around .8706 around time of publication.
Last time NZDUSD was covered in the Ideas You Can Trade series, bearish momentum had reached a support line expected around .8425 and a bullish reversal followed, since then the pair has recovered towards current levels up along a very short term bullish trend line (point 3 in aqua color on chart below) where short term bearish resistance (point 1 in yellow on chart) is being encountered.
If the high of May 6th just under .88 can be overcome NZDUSD should continue its push upwards, whereas if the short term bearish line continues to exhibit resistance a bearish reversal could follow.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8768 with a Limit to take profit @ .8801 and a stop-loss @ .8749 Risk/Reward Summary: Limit risk = +33 pips profit / (-19) Stop-loss risk =Gain to Loss ratio = 1.73
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8676 with a Limit to take profit @ .8642 and a stop-loss @ .8699 Risk/Reward Summary: Limit risk = +34 pips profit / (-23) Stop-loss risk =Gain to Loss Ratio = 1.47
Medium term daily candle chart: