Got a nice bearish play on the NZDCAD market today – a pair I don’t trade very often, but this swing trade is very hard to refuse.
To build value into this trade idea, I start from the weekly chart to begin my top-down analysis.
I posted my weekly chart above, here I get the scope of the bigger picture, and where the market is likely to move on the medium to longer term.
Keeping things simple, the weekly chart is in a range. Price did manage to break out of the range top, but could not maintain the breakout.
As a result, the market collapsed back below the weekly level very quickly. This failure to break out of the range is a big sign of weakness, and suggests there is no strength left in the market.
As long as price remains on the bottom of the weekly level, I maintain a bearish bias.
Now we drill down to the daily chart to complete the trade idea…
With the bearish bias in mind from the weekly chart, I drop down to the daily chart and watch for sell opportunities.
There is a nice bearish rejection candle which we can now build a lot of value into.
We know that the market failed to breakout of the weekly range, we can see the more exaggerated price action from that event on the daily chart. But, the daily chart is giving us even more insight, as we can see lower highs are now being printed – another sign of weakness.
The rejection candle anatomy looks healthy also, the close price is way below the open price – giving it a nice thick bearish body.
To conclude, we have bearish rejection signal coming off lower highs AND a weekly resistance level, following on after the weekly range breakout failure.
Looking to grab a pull-back entry with a limit order. Looking left, it does seem like most trading days do offer corrections up the previous candle’s range.
Best of luck on the charts.
Trade Idea Blown Up By NZD Interest Rate Volatility
Unfortunately, this trade was on the wrong side of the NZD interest rate volatility as the RBNZ made a statement.
These are the type of things we can’t control in the market. Technically the setup was good, but these news events can either destroy your trade, or drive it into rapid profits.
My plan was to let the trade do it’s thing, and I already pre-defined my risk in that trade, so I know if I got stopped out, I know how much I lose.
This is why I always use a stop loss, in case of scenarios like this when you get a burst of volatility that is against you.
Nothing more to be said, the trade idea was good, it just didn’t work out – welcome to the fun world of Forex trading.
Now I sit and wait for the next high reward potential setup 🙂
Another Sell Signal Developed
After being taken out of the trade via some news volatility – another sell setup developed
It basically was a repeat of the previous bearish setup I talked about above – but this one was larger.
The first setup failed (depending on where your stop was), but a second, larger sell signal at the same location really built a very strong case to short.
After that second reversal candle printed, the market dropped like a falling anvil as predicted by our previous analysis.
Sometimes the news gets in the way, sometimes it drives the trade into profit town – something out of our control, and we should not try to.
I am not going to be one of those tossers who claim to get into every move. I wasn’t able to get short here, the second rejection candle didn’t give up a retracement entry price that I was looking for.
The purpose for the follow up post on this is to show how powerful price action can be when you’re trading with the major technical levels in the market.
The conclusion is that the news can be annoying, and from time to time cost us a trade – but the techincals on the chart, like the price action analysis we did above, more often than not eventually play out.
Anyone who got short here with the technical analysis, and survived that whipsaw from the news would be in very large profit now.
The market has reached the next major weekly support now, so if you’re short – you should really consider taking profits.
Best of luck on the charts guys.
wasfi cheaito
Dear Dale,
very nice catch , down today by almost 194 pips . hope to see some in total 400 pips , this trade deserve a video.
regards
Mohamed
Hi Dale, I agree with you that your trade was good. NZDCAD is still Bearish. We will see how it unfolds next week. Thanks for your analysis. I think you are a great trader.
wasfi cheaito
Dear Sir,
are you posting potential trades on your page often ? and is it free of charge to download or get signal on my email for a month period ?
regards
ali
like always ..awesome
Steve Epperson
U.S. people: wait for NY close. Sell stop below candle close. Stop just above high. TP 0.93585, which is the neckline. Wait for the Wednesday close! I like my charts naked…like my women.
Rajesh
I read your view first time and like it very much. Please analyse regularly diffrent pair daily. If your technical finding become true it will really help us a lot .
Thank you
Replying to: Rajesh
Steve Epperson
To get daily analysis from Dale, you have to join the War Room. Click “War Room” at the top of this page and follow the instructions.
Patrick
Thanks for the analysis i wish you can also teach about market structure
Replying to: Patrick
Steve Epperson
Go to “Articles” then click on “Forex Trading Strategies.” That should keep you busy for about a decade.
Ivo
Hi Dale! Thanks for the commentary!
Can I ask you what do you think about GBPCHF Pin Bar on Daily and GBPUSD also.
Thank you in advance!
Replying to: Ivo
Steve Epperson
I’m on a NY chart. The teency weency pin bar on GBPCHF you allude to is looking like a big fat indecision for the market, especially where it’s positioned. I’d stay away for a few more candles. Not seeing a trade opportunity on GBPUSD Daily either.