While major currency pairs choose what direction to take, let’s have a closer look at EUR/NZD. What is so special about this pair? The thing is, this trading instrument is in the phase of continuous consolidation that is reflected by the Wedge pattern. Perhaps, you know better than me that rapid development of the pattern can bring decent profits. By the way, the last target level is 1,800 pips above the current price according to this pattern. That’s quite tempting, isn’t it? So let’s look at the EUR/NZD chart with different time frames.
W1. Bullish divergence.
D1. The scenario can turn invalid at 1.4200.
As the chart shows too long distance to the stop loss level, I advise you to place it at 1.4500 which is below the low of 1.4530.
Besides, with the help of the Wedge pattern I determinedthe target levels for profit taking:
- take profit_1 - 1.5335;
- take profit_2 - 1.6140;
- take profit_3 - 1.6640.
Н4. To reduce risks, you need to wait until a setup occurs on the H4 chart. I’ve got two scenarios regarding the further price movement:
- Buy with a short stop after the resistance at 1.4860 is broken and tested from top downward.
- Buy with a stop placed at 1.4500 after the mirror level of 1.4645 is tested.
Cautious traders are recommended to wait until the upper slant line of the Wedge is broken and enter the market only after that. However, in this case the risk/reward ratio becomes considerably lower and less attractive. Placing buy orders in accordance with the second scenario offers you better opportunities.
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