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
-637352888033023637.png)
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
-637352881707812115.png)
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
-637352882115494009.png)
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:
-637353016645282458.png)
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.
-637353065008718091.png)
Update: Breakeven
-637353410628817901.png)
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD hovers around 1.0700 after German IFO data
EUR/USD stays in a consolidation phase at around 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price trades with mild negative bias, manages to hold above $2,300 ahead of US data
Gold price (XAU/USD) edges lower during the early European session on Wednesday, albeit manages to hold its neck above the $2,300 mark and over a two-week low touched the previous day.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.