NZDUSD: Steep Recovery This Week Lifts Pair Above Bearish Channel and Over Resistance Line of .7700
The daily candle chart below shows the medium term price history of the New Zealand Dollar (NZD) versus the United States Dollar (USD). This currency pair is known as NZDUSD, and is trading around .7679 around time of publication today and just off session highs of .7739.
Last time NZDUSD was reviewed in Ideas You Can Trade was in March when a similar recovery within the overall bearish channel had brought prices towards the upper resistance line of the channel and just under .7700. Since then the pair reversed lower after failing to break above .7700 back in March, and now NZDUSD seems in a similar situation - but this time it has broke above .7700 and also reached above the upper resistance line of the channel.
The momentum of the last few days coupled with the break above both the upper channel line and the .7700 level - appear to be making the very short term trend more bullish - with a higher-high likely. If however support above .7700 is lost - and the pair fails to hold above that line and above the bearish channel - then a sharp reversal would see NZDUSD fall back into the bearish channel. For now the trend seems more bullish but still at the crossroads as a false-breakout could occur.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .7740 with a Limit to take profit @ .7799 and a stop-loss @ .7699 Risk/Reward Summary: Limit risk = +61 pips profit / (-41) Stop-loss risk =Gain to Loss ratio = 1.49
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .7638 with a Limit to take profit @ .7577 and a stop-loss @ .7692 Risk/Reward Summary: Limit risk = +61 pips profit / (-54) Stop-loss risk =Gain to Loss Ratio = 1.12
Medium term daily candle chart: