Earlier in the week, we highlighted this daily NZD/USD support/resistance zone. Price rallied higher and our trades either weren’t triggered because there wasn’t a proper short term retest, or you were stopped out for a 1 unit loss as the daily zone was broken.
But no daily candle could close above the level and it now looks to be a classic fake out. With the confluence of trend line and horizontal resistance, there was always going to be sellers lurking who wanted to defend the level and it looks like that’s what’s happening now.
The daily shows the higher time frame level having held and the potential plethora of open space that price has to drop down into now.
From here, once again we zoom into an intraday chart to find a retest of short term previous support turned resistance. I’ve highlighted the first obvious spot in green and as you can see, the market has given multiple chances to short this level, with maybe even one more right now as we speak.
You could have shorted the higher time frame resistance zone immediately after it held, sure. But I like to look for these intraday retests purely for confirmation and so I can increase the risk:reward available on the setup. How do you trade around these higher time frame levels?
Open a live forex trading account with top Australian forex broker, Vantage FX.
Dane Williams – @VantageFX
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