Hi Traders! NZDUSD forecast update and follow up is here. On August 6th I shared this NZDUSD Forecast And Technical Analysis post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
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Now let’s summarize the idea first:
My Idea:
On the H4 chart, we had a false break followed by bearish convergence. So we were expecting pullbacks and further continuation lower. In addition to this, we had an uptrend line breakout and it looked like a pullback was happening with a hidden bearish divergence that had formed. So based on all this, my short term view was bearish here and I expecting the price to continue lower further.
NZDUSD H4(4 Hours) Chart Current Scenario
On the H4 chart, the price exactly followed my analysis. After the bearish convergence, we had a deeper correction but most importantly the uptrend line breakout was holding. Also, we had a hidden bearish divergence between the first high that has formed at 0.67148 and the second high that has formed at 0.66727 based on the histogram of the MACD indicator. This hidden bearish divergence was followed by a continuing bearish divergence between the first high that has formed at 0.66727 and the second high that has formed at 0.66898 based on the histogram of the MACD indicator. Then the price moved lower as I expected it to, delivering 110+ pips move so far.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
This is a good example of how the market provided us with hints for the bearish view. First, it provided bearish convergence and uptrend line breakout, and then we had pullbacks (as a rule of the thumb after the bearish convergence we expect pullbacks). This pullback happened with hidden bearish divergence followed by continuing bearish divergence based on the MACD indicator (you can find the complete guide about MACD indicator here) which we consider as facts provided by the market supporting the bearish view. As you can see the market provided us hints with all these facts which acted as evidences of bearish pressure and as you can see in the screenshot above how the price moved lower after that. This is why I always say that as traders we should follow the facts and hints that the market provides us and take the right action accordingly.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
