Article Summary:The EURNZD has declined as much as 470 pips in the last seven trading sessions. As the pair stalls in a range, traders will size up fresh market entries.
The EURNZD has been making headlines recently as the pair has been one of the Forex markets biggest movers over the last week. As of December 6th the pair had broken through its daily support levels to effectively end its previous 537 pip daily trend. Below we can get a better look at the breakout and follow the pair as it has now declined as much as 470 pips over the last seven trading days.
After dropping to fresh weekly lows, the EURNZD can now be seen consolidating. This is represented in our graph through a series of doji candles. As the pair temporarily moves sideways, traders will look to position themselves for the market next move.
Learn Forex – EURNZD Daily Trend
(Created using FXCM’s Marketscope 2.0 charts)
Even though the EURNZD has briefly come to a pause, traders may still look for fresh opportunities to enter in the direction of our primary trend. One way to identify potential entries is through spotting potential pricing patterns. Below we can see the GBPNZD pausing in a range on the 15 minute chart. Range resistance is found by connecting the December 10th and 11th high on our chart. Support can be found using the same technique matching the lows of December 9th , 10th and 11th. Identifying a range will then allow us to identify potentail trading opportunites.
Normally, when traders spot ranges they have the ability to sell resistance and buy support without a specific direction bias. However, when a range occurs after a breakout, it is important to remember the direction of the primary trend. Traders can use this information to look to sell the EURNZD as it approaches resistance near 1.5520. In the event that a fresh entry to sell is taken, stops can be placed above resistance. Primary targets may still be near support, however these targets may be extended upon price breakout out towards lower lows.
Learn Forex – EURNZD Range
(Created using FXCM’s Marketscope 2.0 charts)
My preference is to look to sell the GBPNZD. Selling opportunities may come near current resistance levels or upon a breakout of support. Stops can be placed approximately 35 pips away from an entry which coincides with half the distance of our range. Primary profit targets should be set for 70 pips or more, creating a 1:2 risk reward ratio for the position.
Alternatives include price breaking out of the mentioned range.
---Written by Walker England, Trading Instructor
To contact Walker, email WEngland@FXCM.com . Follow me on Twitter at @WEnglandFX.
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