GBPUSD and NZDJPY In Key Areas This Morning

Cory Mitchell, CMT

The GBPUSD and NZDJPY are on the trade radar this morning as they are near key technical areas. 

GBPUSD

The GBPUSD is in a descending channel on the hourly chart. It has recently formed a congestion area near the top of the channel.

There is potential for short trade with up to 6.5:1 reward-to-risk, with a target near 1.2115 which is just above the prior swing low. This is based on the price structure strategy.

There is no trade signal yet, but with the price chopping around near the top of the channel where is the potential for a number of different entries. As consolidations form on the 15-minute chart, a short is taken when the price drops below the consolidation, with a stop loss above.

A consolidation breakout to the downside on the hourly chart can also be used assuming it still allows for a reward:risk of greater than 3:1.

If the price continues to march higher, without a consolidation followed by a downside breakout, then there is no short trade. In this case, the price may be moving out of the descending channel, but that doesn't necessarily indicate a long should be taken (at least not based on the price structure strategy).

GBPJPY also has a similar setup. 

NZDJPY

This pair was discussed yesterday and it continues to oscillate near resistance. The rate is near the top of a 1.5 month regression channel. It's also near the top of a small wedge that has formed near the top of the channel over the last two days.

If a short trade develops again, the reward:risk approaches 14:1 with a downside target at 64, which is just above the prior swing lows of the channel. 

There has been no trade signal yet. The price is starting to consolidate on the hourly chart near 66. A trade signal would require a breakout below consolidation. A stop loss goes above the consolidation.

If the price continues to rally, there is no short trade as the price could be breaking out of the large range. 

Other Pairs to Watch

The USDCAD is near the bottom of a range on the daily and hourly chart, and the EURUSD is near the top of a range.

AUDNZD is near the top of a large descending channel on the daily chart.

By Cory Mitchell, CMT @corymitc

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.

Assume I have positions, all the time, in many pairs.

Trades are based on strategies and are not meant to be predictions. The number of trades won varies between 30% and 60% based on the strategy. My objective is to make money based on solid reward:risk ratios, not try to predict every move of the market.

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