News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/9po5Lg4vnR
  • The Japanese Yen is eyeing the upcoming Bank of Japan rate decision and CPI figures, but JPY crosses will likely remain dependent on broader market sentiment. Get your weekly $JPY forecast from @FxWestwater here: https://t.co/x9rbQpPfWe https://t.co/2x1R5XTVea
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here: https://t.co/yOEvLjKnct https://t.co/uCaWQiu4Ly
  • Crude and Brent oil are on track to extend higher as Gulf Coast supply disruptions and a positive OPEC report bolster sentiment. Uranium is on a massive surge, aided by the famous Wall Street Bets group. Get your market update from @FxWestwater here:https://t.co/XrpV0jcy8e https://t.co/g2To3LmUah
  • RT @michaeljburry: Read thread.
  • The Australian Dollar has retraced from August lows when looking at AUD/JPY and AUD/CAD. However, the AUD/NZD downtrend is intact, will a reversal there appear as well? Find out: https://t.co/8LmgqLLGJO https://t.co/AueigVsuk4
  • The S&P 500, Dow Jones and DAX 30 could be at risk of falling as retail traders continue increasing their upside exposure in these indices. What are the key technical levels to watch for? Find out from @ddubrovskyFX here:https://t.co/OJByiwIppr https://t.co/P1iOONG90N
  • The US Dollar continues to hold its ground against most ASEAN currencies as recent downtrends lose momentum. What is the road ahead for USD/SGD, USD/THB, USD/PHP and USD/IDR? Find out from @ddubrovskyFX here:https://t.co/UcleaZEAaW https://t.co/62bGLvt8fE
  • The Canadian Dollar has been caught in broad ranges against the Euro and the US Dollar, but can the upside bias in USD/CAD and EUR/CAD prolong? Find out here:https://t.co/8DubboXsjv https://t.co/A0sIYo2iP1
  • Want to hear my thoughts on the US Dollar? Check out yesterday's recording with #AuzBiz hosted by @KaraOrdway on 'The Trade' We discussed a #USD index, Treasury yields, $USDJPY, $AUDUSD and $NZDUSD https://t.co/yxwquL1btp https://t.co/RtWjlN6kpv
Trading a Rare Diamond Pattern in NZD/CHF

Trading a Rare Diamond Pattern in NZD/CHF

Kaye Lee, Head Forex Trading Instructor

Talking Points:

  • Unusual Diamond Pattern in NZD/CHF
  • Range-Bound Price Action on Smaller Time Frames
  • 2 Important Points About Risk Profile

Both the New Zealand dollar (NZD) and Swiss franc (CHF) are more traditionally associated with gold than with diamonds, but there is an extremely unusual diamond pattern occurring on the below weekly chart of NZDCHF right now.

Guest Commentary: Diamond Pattern on NZD/CHF Weekly Chart

Trading_a_Rare_Diamond_Pattern_in_NZDCHF_body_GuestCommentary_KayeLee_January23A_1.png, Trading a Rare Diamond Pattern in NZD/CHF

Exotic as it may sound, the diamond pattern is essentially a special type of consolidation. The expected movement is down, especially in this case considering the previous downside momentum. However, given that NZDCHF shows no danger of breaking down on the weekly chart (and could unexpectedly shoot up), the focus should be on the lower time frames and any opportunities presented therein.

The daily chart below provides an interesting perspective in that a rising trend line is supporting price as it challenges the weekly diamond pattern. Currently, price has pulled back to support and neither bulls nor bears are showing a stronger hand.

Guest Commentary: Range-Bound Daily Price Action in NZD/CHF

Trading_a_Rare_Diamond_Pattern_in_NZDCHF_body_GuestCommentary_KayeLee_January23A_2.png, Trading a Rare Diamond Pattern in NZD/CHF

The best solution, then, is to assume that some form of range pattern will prevail. There has already been previous horizontal support, and when considered in conjunction with the rising trend line, it allows for a long trade that has at least 80-100 pips to move. That may not seem like much, but if risk can be controlled tightly enough, then it will be enough to justify taking the trade.

The four-hour chart below shows a slightly different situation. Here, the trend line has already been overshot, and thus, the trade should be focused on the expected retest of that trend line.

Guest Commentary: Trend-Line Retest on 4-Hour Chart of NZD/CHF

Trading_a_Rare_Diamond_Pattern_in_NZDCHF_body_GuestCommentary_KayeLee_January23A_3.png, Trading a Rare Diamond Pattern in NZD/CHF

Horizontal support levels are readily available using previous price action, and a confluence of at least three of these levels provides a nicely defined support zone of 0.7459-0.7487.

Price is just beginning to touch the support zone, but there’s still time before this set-up triggers on the hourly chart (not shown). The triggers in play would be bullish reversal divergence, pin bars, and/or bullish engulfing candlestick patterns.

The upside to the trend-line retest zone is only about 25 pips, and while this might seem too small given a support zone that is 28 pips deep, traders are reminded of two factors:

  1. Once the trigger occurs, stop losses may be placed below the low of the pattern involved, which may be much less than 28 pips; and…
  2. This trade, and indeed all trades, are mainly aimed at getting the trader into a high-probability interaction with the market so that a position can be protected quickly. If this move develops and the trend-line breakout turns out to be false, price could run the 80-100 pips discussed at the beginning of the article, and potentially even more if it breaks the diamond pattern.

Ultimately, no one has the proverbial crystal ball, and thus the job of the trader is to keep taking the next trade and be well-positioned if/when that sizable move develops.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

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

DISCLOSURES