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Scalping the GBPNZD Breakout- Longs Favored Above 1.96

Scalping the GBPNZD Breakout- Longs Favored Above 1.96

2014-04-28 19:40:00
Michael Boutros, Strategist
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Talking Points

  • GBPNZD breakout in question- scalp bias constructive above 1.96
  • Weekly opening range break to validate
  • Major event risk on tap from New Zealand and UK into the April close

GBPNZD Daily Chart

Scalping the GBPNZD Breakout- Longs Favored Above 1.96

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPNZD Makes outside-day push through 1.9598-1.9626 resistance range
  • Daily RSI trigger breach- bullish
  • Topside targets at channel resistance, 1.9757, 1.9895/1.9916
  • Break sub 1.96 turns neutral- break below weekly ORL turns bearish
  • Broader outlook constructive above 1.9432/53- bullish invalidation
  • Look for RSI 60-breach for acceleration / support triggers pending
  • Event Risk Ahead: New Zealand Trade Balance Data tonight, UK 1Q GDP tomorrow

GBPNZD Scalp Chart

Scalping the GBPNZD Breakout- Longs Favored Above 1.96

Notes: A clear RSI trigger and breach above the Asian opening range high immediately shifted our focus to the topside last night with a nice outside day taking us through the 1.9600/26 key resistance range. The pair remains within the confines of a well-defined ascending channel formation off last week’s low with channel support now converging on that same range.

While I am inclined to participate in this setup, it’s important to remain nimble as this may still be an end-of-month blow-off / exhaustion move here. Keep in mind that the monthly opening range clearly broke to the topside on April 16th and as such, a late-month high in the exchange rate is expected. With the last two days of April trade falling on key UK GDP data and the FOMC policy meeting on Wednesday (not to mention NFPs Friday), lighten exposure heading into the close of the month as we look to the May opening for further guidance.

Bottom line: While our immediate focus is lower against this 1.9740/57 resistance range, looking to buy dips while above 1.96 with only a move sub 1.9536 suggesting a more significant high may have been put in place here. The weekly opening range is now in view between 1.9536 ~ 1.9750 and a break should offer further conviction on our near-term bias heading into the May open. 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

Daily / 30min

1.9740/57

61.8% & 100% Ext(s) / 50% Retrace / Weekly ORH

Break Target 1

30min

1.9800

Big Figure / Soft Pivot

Break Target 2

30min

1.9876

1.618% Ext

Break Target 3

Daily / 30min

1.9895 / 9916

1.618% Ext / 61.8% Retracement

Break Target 4

30min

1.9955

Soft Resistance / Pivot (Monthly R3 at 9969)

Break Target 5

Daily / 30min

2.0052/64

50% Extension / March High

Support Target 1

30min

1.9665/75

Soft Support / Weekly R1 Pivot

Support Target 2

Daily / 30min

1.9600/26

100% Ext / 38.2% Retrace / Dec Lows

Bullish Invalidation

30min

1.9536

Weekly ORL / Weekly Pivot (1.9550)

Break Target 1

30min

1.9500

Big Figure / Soft Support

Break Target 2

Daily / 30min

1.9432/60

61.8% & 100% Ext(s) / Wkly S1 Pvt / Dec Low

Break Target 3

30min

1.9400

Soft Support / Pivot

Break Target 4

Daily / 30min

1.9340

Soft Support / Weekly S2

Average True Range

Daily (20)

148

Profit Targets 34-37pips

*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

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