Timeframe: D1 Recommendation: Short Position
Entry Level: Short Position @ 1.6700
Hedge Level: Stop Buy Order @ 1.6850 (Take Profit Level @ 1.7100)
Take Profit Zone: 1.6250 – 1.6300
Stop Loss Level: 1.6850 (We will not use a stop loss order to close this trade for a loss and execute this trade as advised below). We do use stop loss orders to protect our profits and close a trade for a profit. Each trader may decide if and where they would like to place the order.
The EURNZD has rallied as visible in this daily chart (D1). This currency pair is now trading at very strong resistance levels which are marked by the light red box in the above chart. We expect the EURNZD to lose bullish pressures and correct back down to its support zone which is marked by the light blue box in the above chart.
MACD indicates that momentum is trapped inside a triangle formation which is marked by red lines in the above chart and the histogram trades right at its moving average which we expect to perform a bearish crossover. RSI is trading near overbought territory and completed a breakdown which is another bearish signal.
We recommend a short position at 1.6700 with a potential second entry level at 1.7100. We also recommend a stop buy order at 1.6850 with a take profit target of 1.7100 in order to hedge our initial short position and before adding new short positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.6850. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.6300.
Here are the reasons why we call the EURNZD currency pair lower:
- The EURNZD currency pair is currently trading at strong horizontal resistance levels
- MACD is showing an entrapment of momentum in a triangle formation
- RSI is trading near overbought territory after completing a breakdown from overbought conditions
- Profit taking in order to realize trading profits which will add selling pressure
- New short positions by institutional swing traders
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