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Scalping the GBPNZD Reversal- Bias Bullish Above 1.9753

Scalping the GBPNZD Reversal- Bias Bullish Above 1.9753

2014-01-08 21:37:00
Michael Boutros, Strategist
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Talking Points

  • GBPNZD encounters key near-term support at 1.9753/54
  • We look to a break of the weekly opening range for conviction on scalp bias
  • Longer-term outlook remains weighted to the topside above 1.9538

GBPNZD Daily Chart

Forex_Scalping_the_GBPNZD_Reversal-_Bias_Bullish_Above_1.9753_body_GBNZD_DAILY.png, Scalping the GBPNZD Reversal- Bias Bullish Above 1.9753

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • Critical Fib support at 1.9453/54 holds- now represents weekly/monthly opening range low
  • Break below invalidates near-term scalp bias- support targets at 1.9630, 1.9584 & 1.9538
  • Scalp bias awaits weekly opening range break 1.9753-1.9870ish
  • Topside breach targets objectives at 2.0026/33, 2.0033/93 & 2.0188-2.0217
  • Key Topside resistance 2.0296- 2.0338
  • Look for momentum to hold above 50 (bullish)- topside trigger pending
  • Key Event Risk Ahead: BoE Rate Decision tomorrow, US Non-Farm Payrolls on Friday

GBPNZD Scalp Chart

Forex_Scalping_the_GBPNZD_Reversal-_Bias_Bullish_Above_1.9753_body_GBPNZD_SCALP.png, Scalping the GBPNZD Reversal- Bias Bullish Above 1.9753

Notes: A popular trade in the DailyFX on Demand room, this long-range setup looks to play the rebound off key Fibonacci support at 1.9753/54. This level represents the confluence of the 38.2% retracement from the rally off the October low and the 100% extension taken from the decline off the January high, and now marks both the monthly & weekly opening range lows. Note that the momentum signature has continued to hold the 40-60 range for the majority of the week with today’s push into near-term resistance at 1.9877/87 finally asserting the oscillators position above 60.

Bottom line: while our broader bias remains weighted to the topside, we will respect the weekly opening range with a break below 1.9753 targeting subsequent support objectives. The broader bias remains weighted to the topside above the 1.9538/84 support range. Note that the NZDUSD scalp featured in yesterday’s report has continued to push off the 83-handle with a break below the weekly range further supporting this setup.

Although we’re not really expecting anything earth shattering tomorrow, traders are recommended to remain nimble heading into the BoE rate decision with the highly anticipated US non-farm employment report following on Friday. Look for sterling strength surpassing today’s highs to offer conviction on our scalp bias with close above, targeting subsequent resistance targets.

* 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

Bearish Invalidation

Daily / 30min

1.9877/88

23.6% Retrace / 61.8% Ext / Weekly ORH

Break Target 1

30min

1.9960

38.2% Retracement / Pivot

Break Target 2

Daily / 30min

2.0027/33

50% Fib Exts / 50% Retracement

Break Target 3

Daily / 30min

2.0093

61.8% Retracement

Break Target 4

Daily / 30min

2.0188-2.0217

78.6% Retrace / 1.618% Ext

Break Target 5

Daily / 30min

2.0296-2.0338

2010 Low / Dec High / 61.8% Ext / 78.6% Retrace

Bullish Invalidation

Daily / 30min

1.9753/54

100% Ext / 38.2% Retrace / Wkly & Mnthly ORL

Break Target 1

Daily / 30min

1.9630

December Low

Break Target 2

Daily / 30min

1.9584

50% Retracement / 100DMA

Break Target 3

Daily / 30min

1.9538

1.618% Extension

Break Target 4

Daily / 30min

1.9415

61.8% Retracement

Average True Range

Daily (20)

192

Profit Targets 45-48pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

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

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

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for a Live Scalping Webinar on Monday on DailyFX and Tuesday, Wednesday and Thursday mornings on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)

Interested in learning about Fibonacci? Watch this Video

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