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NZDUSD Weekly Opening Range Trade- Longs at Risk Sub 8700

NZDUSD Weekly Opening Range Trade- Longs at Risk Sub 8700

Michael Boutros, Strategist

Talking Points

  • NZDUSD stalls at fresh multi-year highs
  • Momentum divergence warns of possible exhaustion
  • Weekly open taking shape above key support- break to validate scalp bias

NZDUSD Daily Chart

Forex-NZDUSD-Weekly-Opening-Range-Trade--Longs-at-Risk-Sub-8700_body_Picture_2.png, NZDUSD Weekly Opening Range Trade- Longs at Risk Sub 8700

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • NZDUSD Fails to hold above initial April opening range high at 8700
  • Continued daily RSI divergence, ongoing for nearly a month- bearish
  • Support objectives at 8630, 8580 & 8512- bullish invalidation
  • Resistance at 8700- bearish invalidation
  • Breach targets key resistance range 8762/93
  • Daily RSI support / breakout trigger(s) pending
  • Event Risk Ahead: US & New Zealand CPI tomorrow, Fed’s Beige Book on Wednesday

NZDUSD Scalp Chart

Forex-NZDUSD-Weekly-Opening-Range-Trade--Longs-at-Risk-Sub-8700_body_Picture_1.png, NZDUSD Weekly Opening Range Trade- Longs at Risk Sub 8700

Notes: A key outside reversal day at multi-year highs on the first of the month initially shifted our focus to the downside on NZDUSD heading into start of the April trade. The subsequent reversal and failure to hold above the initial April 1st high at the 87-handle and compelling daily RSI divergence has me looking for a near-term high here. As we open the week, prices look to be in consolidation with a series of lower highs and higher lows and we’ll look for a breakout for further guidance on our near-term directional bias. Daily RSI does have some room to the topside so I still wouldn’t put it past this thing to make another run at the highs.

Bottom line: the weekly opening range is set just above a key Fibonacci confluence at 8630 with a break below shifting our focus into subsequent support targets heading into the close of the week against 8700. Although the weekly opening range high comes in at 8692, the 61.8% retracement of the decline off the highs comes in just higher at 8698 and we will use this threshold as our topside limit. A breach/close above invalidates our bearish outlook and looks to challenge the 2014 highs made last week with more substantial resistance seen higher at 8760/93. Use caution heading into the New Zealand / US inflation prints over the next 24-hours Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* 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

30min

8693/98

61.8% Retrace / Weekly ORH

Break Target 1

30min

8719

78.6% Retracement

Break Target 2

30min

8745

2014/Monthly High

Break Target 3

Daily / 30min

8762/92

8/8/2011 Close (High Day) / 1.618% Fib Ext

Support Target 1

Daily / 30min

8675

4/10 Close / 2013 High / Soft Pivot

Bullish Invalidation

30min

8623/30

50% Retrace / 61.8% Ext / Weekly ORL

Break Target 1

30min

8602

61.8% Retracement

Break Target 2

Daily / 30min

8583

100% & 61.8% Ext(s) / May 2013 High

Break Target 3

30min

8562

78.6% Retracement

Break Target 4

30min

8540

88.6% Retracement

Break Target 5

Daily / 30min

8513

Monthly ORL / Oct 22nd Close (High Day)

Break Target 5

Daily

8430/52

Sept & Jan Highs / 61.8% Retracement

Average True Range

Daily (20)

70

Profit Targets 16-18pips

*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 Live Scalping Webinars Tuesday-Thursday this week on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)

Interested in learning about Fibonacci? Watch this Video

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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