NZD/USD Inside Bar Breakout
Market Condition: NZD/USD Pending Daily Breakout
Target 1: 1X Range130 Pips
Target 2: 2x Range260 Pips
Invalidation: Continued Consolidation
(Created using TradingView Charts)
The NZD/USD has been consolidating over the last two days, after declining as much as 130 pips on Tuesday. Currently, prices continue to trade inside of Tuesdays high and low, creating a series of inside bars. Traders may begin looking for a breakout, may use Tuesdays high and low as values of support and resistance. Bearish breakouts may be planned if prices break support, which is found using the daily low at a price of .7234. Alternatively, bullish breakouts may begin above Tuesday’s high of .7364. It should be noted that this trading range, measuring 130 pips, may be used to find potential targets for a breakout. A 1x extension of this range places bullish targets near .7494, and bearish targets near .7104.
In the event of a false breakout, traders may consider using half the distance of the range, 65 pips, to create an initial 1:2 Risk/Reward ratio. Traders should also remember that it is possible that price action to continue to consolidate. In this scenario, traders may elect to leave pending entry orders, or trade the ensuing range.
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