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The New Zealand Dollar is the strongest currency and the USD is the weakest currency. Could this provide an opportunity for a day trade?
Watch the video to find out more…
https://youtu.be/uT6LFhZ1PZo
Today, I’ll be going through a potential NZD/USD long opportunity, what we currently have on the market, and what we could anticipate from the market.
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30-minute timeframe
I wanted to talk about the characteristics of the impulse and retracement phases in the market, and how you can identify opportunities within that.
So, what we can see in a four-hour uptrend and a four-hour impulse phase is the market in the 30-minute timeframe. It is currently making higher highs and higher lows.
Sometimes, it will give you a false breakdown of the market. This is because the price comes back and retests supply and demand as it starts to move to the upside.
But the fundamentals are there. Every time we get a retracement phase on the 30-minute timeframe, the market makes lower lows and lower highs.
When that changes, then we then start to see the four-hour in an impulse phase, with the market making higher highs and higher lows.
Before we look at the day trading opportunity, we need to understand how the lower timeframes work within a higher timeframe phase.
The dark grey boxes highlight the four-hour impulse phase in an uptrending market. The 30-minute timeframe within these phases start to make higher highs and higher lows. This gives us an opportunity to buy the phase. On a retracement phase within an uptrend, we see the 30-minute timeframe forming lower lows and lower highs.
What’s interesting in this timeframe is that we could be potentially set up for another impulse phase in the four-hour timeframe.
The reason is because the NZ Dollar is one of the strongest currencies, and the US Dollar is one of the weakest right now. When we see that, the market naturally trends to the upside.
Four-hour timeframe
We were talking about the NZ Dollar and a couple areas for opportunities. The reason why the price bounced was because there was a retracement phase.
The market came in, then rallied to the upside. Ideally, I’d want the price to come back further. However, the price retested this previous structure high.
Since the strength of the NZ Dollar is so strong, we’re starting to see the retracement become more shallow. But we can look for that turning point in the 30-minute timeframe trend.
30-minute timeframe
If we look at the 30-minute timeframe again, the price is still making lower lows and lower highs because we haven’t taken out this high yet.
However, I’m expecting the market to respect this area because the price closed high.
Fibonacci tool
In the past, we talked about the 23.6 Fibonacci tools. For me, that is where the prices extended so much that we’re going to see a reversal in the trend soon.
If you were trending to the downside, you would look at a retracement phase. Most traders would want to be short from either the 50% or the 38.2%, depending on the rules or the 618.
However, I like to look at the 23.6, the last-ditch area for the market. If the market closes above this area, then I’m expecting a move to the upside.
The NZ Dollar is the strongest currency and the USD is the weakest currency. This suggests that we should be looking for long opportunities. The four-hour timeframe is making higher highs and we recently saw the price retest a support zone.
The 30-minute timeframe rallied and closed above the 23.6 Fibonacci level. When the price does this, we will likely see a reversal to the trend, which is what we are looking for. We need to identify a demand zone where a higher low could form for an early long opportunity on this four-hour impulse phase.
I’m going to look for areas of demand where I expect the market to come into. I’m expecting another move back down and a potential long opportunity coming through at 7248.
The reason is because we’ve got the four-hour potentially moving into an uptrend. We’ve got the Fibonacci 23.6 tool closing above.
So, I’m looking for this opportunity. I’ll make a move and trade it above to the previous structure highs, which would be through 72790. That would be a resistance area for the market.
It is where a bit of selling momentum came in. A nice pull back into this area and a long up to 7275 is looking good in the strength and weakness.
The price recently consolidated and rallied from the 0.7250 where we could see buyers step in again. If the price retraces back to this zone we could look for a day trading opportunity back up to the highs.
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