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EURNZD Long Range Scalp Eyes Resistance- Bullish Above 1.6055

By , Currency Strategist
22 October 2013 19:09 GMT

Talking Points

  • Daily momentum divergence suggests near-term risk remains to the topside
  • EURUSD breaks yearly high – NZDUSD holds post NFPs – Suggests topside EURNZD bias
  • Scalp bias bullish above 1.6055 – Long conviction above channel resistance

EURNZD Daily Chart

Forex_EURNZD_Long_Range_Scalp_Eyes_Resistance-_Bullish_Above_1.6055_body_Picture_2.png, EURNZD Long Range Scalp Eyes Resistance- Bullish Above 1.6055

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURNZD trading within a descending channel off the October high
  • Interim Resistance 1.6230- Breach targets 1.6437, key resistance 1.6496
  • Interim Support 1.6055- Key support 1.5912/19- Bullish invalidation
  • Daily RSI divergence identified- Suggests near-term risk remains to the upside
  • Price action back above the 200-day moving average
  • Topside momentum trigger pending
  • EURUSD has already cleared yearly highs- NZDUSD still well-off its highs
  • Key Events Ahead: Eurozone Consumer Confidence tomorrow and Manufacturing, Services & Composite PMI Thursday

EURNZD Scalp Chart

Forex_EURNZD_Long_Range_Scalp_Eyes_Resistance-_Bullish_Above_1.6055_body_Picture_1.png, EURNZD Long Range Scalp Eyes Resistance- Bullish Above 1.6055

Notes: This has been an extremely popular setup in DailyFX on Demand as the pair continues to trade within the confines of an ascending channel off last week’s low. Although the October opening range proved bearish with the break on 10/14, the pair has encountered support just below the 200-day moving average at the 38.2% extension off the yearly highs at 1.6055. With the EURUSD now clearing the 2013 highs and a bullish weekly opening range this week on EUR/NZD, we shift our focus higher in the near-term with key interim resistance seen at 1.6230. Note that channel resistance dating back to the October high is just beyond with a breach here offering further conviction on long scalps.

Note that bullish divergence on the daily chart has been identified with this same formation seen at the April lows (which was the 2013 low/ start of rally into yearly high). We will continue to target topside scalps with only a break and close below 1.6055 invalidating near-term bias; such a scenario targets key longer-term support at the 1.5913/18 Fibonacci confluence.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

30min

1.6206

38.2% Retracement

Bearish Invalidation

Daily / 30min

1.6230

23.6% Fib Extension

Break Target 1

30min

1.6265

50% Retracement

Break Target 2

30min

1.6290

Soft Resistance / Pivot

Break Target 3

30min

1.6324

61.8% Retracement

Break Target 4

30min

1.6365

Soft Resistance / Pivot

Break Target 5

30min

1.6409

78.6% Retracement

Break Target 6

Daily / 30min

1.6437

38.2% Retracement

Support Target 1

30min

1.6170

Soft Support / Pivot

Support Target 2

30min

1.6134

23.6% Retrc / Weekly Opening Range High

Support Target

30min

1.6090

Soft Support / Pivot

Bullish Invalidation

Daily / 30min

1.6055

38.2% Fib Ext

Break Target 1

30min

1.6020

Soft Support / Monthly Low

Break Target 2

30min

1.5970

Soft Support / Pivot

Break Target 3

Daily / 30min

1.5913/20

61.87% Retrace / 50% Fib Ext

Average True Range

Daily

149

Profit Targets 34-38pips

Other Setups in Play:

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---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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22 October 2013 19:09 GMT