One of my favourite pairs right now is the GBP/NZD. This pair has been very slowly going lower and stopping many people which is or were believing that this was going to stop very soon. However, they had some reasons which is valid and worth a try. If we look the weekly chart, we will see that we were at the 618% and 78.6% fib from 2 different fibonacci.
When I see 2 fib levels in the same place like that, I try a small trade there because the risk is so small that its worth it. However, I think the best chart that I have for the GBP/NZD is the daily.
In the Daily chart above, we can see pretty clear that the last three moves to the downside has been very similar to each other in size. The moves to the downside has been approx. 2,160 pips.
At the current price action (right now at: 2.0424), I am waiting as I have been for the last 2 months for the GBP/NZD to reach at least 2.0260 area which will reach the same size move from those 3 down moves we had before.
My plan:
There is two options here which I can choose, do I buy around 2.0260 or should I wait for more confirmation first before buying?
The confirmation could be to wait for a break above 2.0850 which is the last major high we have right now and a break about a massive trend line which is in play since last year.
Regarding risk, I would probably put my Stop Loss at 2.0041 and a target at 2.1480. (keep in mind that this is a long term trading plan)
By Thiago Duarte
Chief Strategist at Duarte Investment Group
thiago@duarteinvestmentgroup.com
@thiagotrader
