NZD/CAD – Long term analysis & Short term trade

Time Frame:
- Daily/Weekly Analysis
- 1HR/2HR Execution
- 30Min Confirmation

Trend: HTF Downtrend after HTF pullback to 70.70% Fib
Weekly = Downtrend
Daily = Downtrend

1. We are observing the continuation of a downtrend after a large retrace took us to the 70.70% Fibonacci.

2. We then continued our descent within a strict downward trend line (5 bounces off resistance, 3 off support). As of recently, support has been weakening as you see price is not respecting the trendline as strongly as it was. In addition, we are now back into a demand zone that has already been mitigated – meaning, the liquidity that would otherwise help us reverse momentum to the upside is no longer there and instead the lack of buying liquidity should help invalidate and turn this into a supply zone.

3. This happening would in the longer run be helpful for buyers as I do believe, in the longer run, price wants to reverse and we want to create a HTF higher High and mitigate Supply levels above. However, buyers lack liquidity at the moment and could use a strong low/level of support/demand zone to propel this reversal.

This current level/zone is likely an induced order block to bait buyers in however I would be careful of price potentially holding at strong support and psychological .7900 level which is also the bottom of our mitigated demand zone – this could propel a large move to the upside and begin the HTF reversal.

My short term hypothesis and trade plan for NZD/CAD is since we just recently had a liquidity grab and hit our LTF supply zone, I will wait for a strong resistance off our current 8.08 level (61.8% fib) and with confirmation, take a short trade toward the bottom of our nearer demand zone and ultimately to our POI below.

Confluence:
1. Weakened Support/Trend line breaks
2. 61.8% resistance / Liquidity Grab for further push downward
3. Mitigated demand zone turning to Supply Zone
4. Strong unmitigated demand zone below for necessary liquidity
5. Lacking liquidity for HTF reversal

Trade Plan as follows:
Stop Loss: Above mitigated demand zone
Take Profit 1: Bottom of mitigated demand zone = 3.36 R:R
Take Profit 2: Top of unmitigated demand zone / POI = 5.67 R:R
*Take Profit 3: Retest of Lowest low / bottom of demand zone = 10.5 R:R

Trade active:

Approaching our 3.3 R:R TP1