Morning team,
After GBP/NZD retested previous support as resistance and broke out of the daily descending channel that we spoke about last month, the bears have remained in full control of the pair.
You can see that price has been in a pretty obvious bearish trend for at least the last couple of months simply by saying that looking at the chart from left to right, price is sloping down. You really can make trading forex as hard or as simple as you like!
But it's here on the GBP/NZD hourly that we've now seen a triangle pattern form. When it forms within the context of a higher time frame trend and then breaks out in that same direction, it's quite a strong continuation pattern.
In this case, we're in a bearish trend and price has broken out of the triangle to the downside. Yep, bearish as fuck.
I myself have never been a highly aggressive trader, so I haven't jumped on board the short train yet. The question you need to ask is how do I manage my risk if I entered here, and I just can't find a place to put my stop loss and still be able to maintain a decent risk:reward ratio.
I instead wait for an intrday pullback into previous short term support turned possible resistance. With the most obvious level to look out for, highlighted in grey on the GBP/NZD hourly chart above.
Lets see what happens if/when price returns to this intraday level. If price stalls, then I'll be using that as an opportunity to get short with a tight stop and give myself an opportunity to achieve a high risk:reward ratio.
Best of probabilities to you.
Dane.
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