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Scalping the Kiwi Trend

Scalping the Kiwi Trend

2013-09-18 19:00:00
Walker England, Forex Trading Instructor
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The NZDUSD has been one of the Forex markets strongest trends, moving as much as 529 pips since the beginning of September. As prices have pushed towards higher highs, scalpers will want to validate short term momentum prior to entering in with the standing trend. Today we will assess how we can spot this momentum and how it is useful for the short term Forex trader.

  • NZDUSD Trend
  • Finding Momentum
  • Market Validation

Learn Forex – NZDUSD 4Hour Trend

Scalping_The_Kiwi_Trend_body_Picture_2.png, Scalping the Kiwi Trend

(Created using FXCM’s Marketscope 2.0 charts)

NZDUSD Building Blocks

Due to counter trend swings that can occur to news and other events, it is also important to determine the direction of short term market momentum. One technique that can be useful to scalpers is to divide the previous trading week into halves. This will create two congruent trading blocks to help determine if this week’s price action is pointed in the direction of the primary trend trend. If both points of analysis line up, traders may then look for future scalping opportunities.

Below we have divided our previous trading week price action on the NZDUSD into segments labeled Block 1 and 2. Block 1 begins on Wednesday the 11th and runs through Sunday the 15th. Block 1 shows the NZDUSD breaking to a new high at .8168. Block 2 shows a continuation of this upward momentum as price surged to higher highs at the beginning of this week’s trading. To symbolize the strength of both blocks they can be seen labeled in blue below. Knowing that market momentum is currently continuing in the direction of the primary trend, Forex scalpers can continue to look for entries as the market presses to fresh highs.

Learn Forex – NZDUSD Building Blocks

Scalping_The_Kiwi_Trend_body_Picture_1.png, Scalping the Kiwi Trend

(Created using FXCM’s Marketscope 2.0 charts)

Even though both blocks in our momentum analysis have shown previous highs created, current price is still below our previous high at .8247. Scalpers will want to see price break above this value, if the current trend is to continue.

In the event that the price breaks below the previous low of .8154, this would at least temporarily invalidate the NZDUSD trend. At that point traders should potentially look for a new pair to trade or wait for a new breakout towards higher highs.

---Written by Walker England, Trading Instructor

To contact Walker, emailinstructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

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