As usual, using the top down approach, we look at the NZDCHF pair and look to ascertain the general trend direction before we initiate trades. Earlier, I had mentioned that this pair, just like NZDCAD and NZDUSD pair were at overbought territory in the weekly chart and we were waiting for confirmation bear candles before we initiate shorts. This has been the case and price action is trending lower in the weekly chart and retracting from the upper BB with a sell signal formed by the stochastics. To even cement this, price action is reversing from the 38.2% Fibonacci level which is at confluence with the 0.72 handle. This level was a region of immense resistance to any move up and we saw those reversals candle sticks with long upper wicks.
There are no serious fundamentals from either economy to cause volatility for this pair but today’s Switzerland CPI m/m at 0.2%e from last month’s -0.1% set for 0715 GMT will likely push this pair lower.
Our entries as usual will be in the 15 min chart, price action is trending higher in the 4HR chart with a buy signal formed. We shall only takes shorts and we shall take this in the 15 Min chart only when there is a sell signal in the overbought region of the stochastics with a secondary confirmatory candlestick formed.
Our possible entry points will be that 4HR Support line at 0.7020 but any region with an overbought stochastics between yesterday’s high and 61.8% Fibonacci level in the 15 minute chart will yield a good risk reward ratio.
Therefore, trade as follows:
Sell Limit: 0.7-0.7020
SL: 1:3 Risk Reward Ratio, look to hold this while adding positions at all highs.
Have a good trading day.