GBP/NZD possible trend continuation setup (1.77000 price area)
From a technical perspective, the GBPNZD has been in an uptrend since february, this trend also being confined (not perfectly) in an upward channel.
Today, price action tried heading for the upward boundaries of the channel to retest it but failed against higher time-frame structure where it would have been expected that sellers would step in.
We mention that it can take a while for price to drop to our entry point IF it even drops to that level at all. Patience is a virtue, we all know that.
But if it price action does drop lower, we are looking for an entry around the 1.7000 price area, our stops 1*(1H 7period ATR value) below 1.76000 at the time of entry and we are recommending the following trade management approach when it comes to targets:
- Since price would be pushing against higher time-frame structure, we advise taking half of our position size out around 1.79000 and trail our stops above break even for a risk-free trade while letting the other half on for extended targets at 1.82000.
- Optionally, after price breaks above the 1.8000 level and comes back down to retest it, we would start sizing into our halved position in a such a manner than allows us to maintain our stops above our break-even level at all times without forcing it (by forcing it we mean trailing the stop to a level that would not make sense technically, but you are trailing it anyway in order to keep it above break even). Therefore, we must pick the amount by which we are going to size in with surgical precision. Played right, this trade can yield substantial rewards for the risks taken.
Today, price action tried heading for the upward boundaries of the channel to retest it but failed against higher time-frame structure where it would have been expected that sellers would step in.
We mention that it can take a while for price to drop to our entry point IF it even drops to that level at all. Patience is a virtue, we all know that.
But if it price action does drop lower, we are looking for an entry around the 1.7000 price area, our stops 1*(1H 7period ATR value) below 1.76000 at the time of entry and we are recommending the following trade management approach when it comes to targets:
- Since price would be pushing against higher time-frame structure, we advise taking half of our position size out around 1.79000 and trail our stops above break even for a risk-free trade while letting the other half on for extended targets at 1.82000.
- Optionally, after price breaks above the 1.8000 level and comes back down to retest it, we would start sizing into our halved position in a such a manner than allows us to maintain our stops above our break-even level at all times without forcing it (by forcing it we mean trailing the stop to a level that would not make sense technically, but you are trailing it anyway in order to keep it above break even). Therefore, we must pick the amount by which we are going to size in with surgical precision. Played right, this trade can yield substantial rewards for the risks taken.
Comment:
Price action did not yet meet our entry rules for this trade, so we did not have the opportunity to engage. Price is pushing into the higher time-frame structure zone again. We are watching it closely to see how it reacts to it. Will structure hold or will price action fall back down ? We shall see. For the moment, we can say with certainty that price action is forming an ascending triangle.