GBP/NZD Price Analysis: Bears seeking a day-trade to daily support structure, 1:2.6 R/R
|This was a developing story
GBP/NZD has offered an opportunity to the downside, but it is a higher risk setup considering the strong corrective hourly sticks as illustrated in the hourly chart below.
The setup is such that the market is expected to melt to the downside and make an equal daily low, to fill in the wick of the daily bearish impulse from lower time frame price action having made a 50% mean reversion on the hourly chart.
Daily chart
The above chart shows the wick that is supposed to be fille din on the lower time frames and the daily structure where supports and resistances meet.
Hourly chart
the above hourly chart shows that the correction was quite strong in relation to the bearish impulses, not something that is conducive to a high conviction price action trade setup.
However, instead, considering the time frame analysis is compelling, a lower risk can be administered to the trade.
15-min chart
The price has already triggered 'at market' at a resistance structure below the trendline resistance to give a 1:2.6 risk to reward ratio (R/R) trade setup.
Breakeven is the first objective, managing risk is paramount for a strategy that relies on favourable R/R, and breakeven stop losses are essential when playing the probabilities.
Breakeven is achieved when there is a new structure formed below the entry point that acts as a support to protect the entry point turned stop loss.
Update: Fighting for breakeven
It has been a real slog, but the price action is finally behaving as we want it to:
Ideally, we want to see a 15 min close below the newly formed resistance structure before moving the stop loss to breakeven.
Preferably, we want to see a close into the breakeven point, but the more risk-averse can move stop loss to breakeven on a close below the resistance structure.
Update: Breakeven achieved
The price action is sideways and respecting the structure, so the stop loss has been moved to breakeven.
This is now a risk-free setup targeting 2.6R.
Update: Breakeven
The price drifted to the upside before melting to the target without the opportunity to participate in the move with proper risk management.
The strategy caters for a percentage of breakeven and losing trades.
The strategy factors a minimum of a 1:2 risk to reward ratio.
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