Update for August 31,2012.
Observation: The Pair continues to hold the 6 days support going for a uptrend on the 1 hour chart.
Due to my portfolio beyond the positions allowed, I decided to close 1 position and left 1 position open.
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| 1 hour chart
Observing the 1 hour chart, We are currently monitoring the positions. 2 EMA namely the 50/200 ema serves as resistance for the short term but as we observed, it has a possibility for a cross.
MACD playing above and below the 0. For short term, I believe this is a good set up for the pair with a very tight stop loss.
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| 4 hour chart
Now, The story changes when we compare the 1 hour chart with the 4 hour chart.
MACD is barely above the 0 Line and now testing the 50 day EMA.
For a longer time period of trade, I believe I want to see a second candle stick for confirmation before entering this pair. We are still waiting if it can hold support. If it does, this will be the double confirmation of the trend which gives a higher chances of price appreciating higher. For me, Im currently having a very tight stop loss since yesterday for this pair.
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| 1 day chart
Now, The reason why i place Tight set up is due to this pair. The RED LINE shows the 4 year resistance which has 3 confirmations(check yesterdays blog). It respected this resistance 3 times which gives a strong indication that the pair will respect this.
At the moment, we have a 150 target price is current feasible but it shows higher risk than the NZD/USD trade. At the moment I open this pair to break even the overnight rates of the NZD/USD trade that I posted yesterday.
In summary for this pair:
2 charts gives good entries for the pair but looking for the long term , we see that this will have a downside.
I believe that this trade has bigger risk but it also gives tight stop loss area which gives a high Risk Reward ratio. : 1:8 level. As they say, No risk means no rewards.
If you want to enter this pair, I believe you have to have a tight Stop loss and maintain a high reward due to the risk profile of this pair.
Update : AUGUST 30,2012
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I was able to zoom out and scan the over all direction of the pair. I will start in 2007 zooming out then zooming closer to see the whole trend of the market.
I was ablet to scan and see the 2008 peak and connecting to current price. I was able to observe that the market respects the 2008 peak and the march 19, 2012 price. It happened again to august 21,2012 giving a (3rd confirmation) to this pair.
My objective is still in place for shorter term which gives a short 1: 3 ratio with a possible 120 pips entry but with a very tight stop loss.
Zooming closer to the chart. We are still betting on a short term crossover of 50/200 ema crossover that can boost this pair.
Im still considering the OIL price hike which gives canadian economy a boost due to their resources in oil for short term.
In this regard, im still keeping a tight stop loss for this pair.
Zooming for the 4 hour chart. I see a major resistance of this pair at 80.030. MACD shows good divergence which is currently crossing above 0 level.Maintain the trend line, we will still continue trading this pair higher.
support: 79.25-79.30 for this pair.
Breaking this will suggest that this pair will now proceed in selling the pair.
the 1 hour shows a clearer picture of this pair . Giving a 3 confirmations. Now the aim is to break its current resitance so the pair can move higher and give us a 150 pips profit for short term.
Update: Due to confirmation of reversal and break out of 50 ema moving average, I reveresed the trade. Making the 2 50/200 ema as resistance.
I decided to hedege the position due to 3 timeframes shows different indicators.
I place the stop loss to their brake out points to minimize
In this chart, the criteria is that the resistance was in placed. Momentum in Sell
In contrary, This chart shows MACD divergence going for reversal.
Zooming in 1 hr chart, MACD turns above 0 and trend started to go higher.
As of London session: my short position was booted out while my long position continued. Thus minimizing the loss that was able to do couple of mins ago.
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Trade Strategy: Fundamental + trend + support
Strategy:5 day term
Target Price : Fixed
Exhibit 1.1 1 hour Chart
In this chart, I was able to enter slowly due to the cleared support of the 50 day EMA. I decided to use the 1 hour chart to identify my 60- 80 pips stop loss and find an immediate major support that can minize my risk.
I was able to find a 79 support which gives me less exposure. 4 hour chart indicators will still be in effect of my trade of this pair.
Exhibit 1.2 4 hour chart
Looking at the MACD. below the 0 line. I was not 100% convinced in this trade.I believe that there is a big risk that it can correct lower but because of a fundamental report regarding an explotion of Oil refinery that can shoot the oil up, I believe putting fundamental factors in this trade allowed me to start buying. Starting at 20% of the total position trade.
Observing the 50/200 ema crossover which is a bullish factor, I believe it can still move higher.
Exhibit 1.3 1 day chart
Even though there are some technical factors already in placed. I decided to be conservative in this approach.
Looking at the over all trend via the 1 day chart, I see that the 50/200 ema are still in bearish signal. Even though the price stands above the 2 moving average, A tight STP below the 50 EMA is still safe for this trade.
Summary:
1.I'll be trading this in a much more longer time period and basing everything on the 4 hour chart.
2. Entering slowly could give you the feel of the market where the price direction and where it wants to go for the week.
Unless there are higher time period technical inidactors verification. I believe a conservative approach is applicable.
3. I consider the fundamental factors for this trade.
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