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On the daily chart, the price is in a downtrend and while measuring the two waves using the Fibonacci expansion tool, we have two key support zones that have formed. The first key support zone is formed by the 100%(1.90956) Fibonacci expansion level of the first wave and the 61.8%(1.89990) Fibonacci expansion level of the second wave. The second key support zone is formed by the 161.8%(1.78964) Fibonacci expansion level of the first wave, the 100%(1.82140) Fibonacci expansion level of the second wave, and the psychological level 1.80. The price which is moving lower has broken below the first key support zone and is holding below it. The price still has room lower towards the second key support zone. Currently, there are no signs of a trend change. Also, based on the Parabolic Sar we could see that the dots are above the price which we may consider as evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal at the cross of -DI (red line) versus +DI (green line), and the main signal line (silver line) reads value over 25, we may consider this as another evidence of bearish pressure. So everything looks good here for the bears, we may now move down to lower timeframe and see if we can find evidences supporting this bearish view.
The ADX indicator gave a bearish signal here as well on the H4 chart at the cross of -DI (red line) versus +DI (green line), and the main signal line (silver line) reads value over 25, we may consider this as evidence of bearish pressure. Also, we have a strong support zone that has formed and the price which is moving lower has currently broken below this zone and is holding below it. Currently, this strong support zone is acting as a strong resistance zone for us. We also have the 200 moving averages coinciding in this same area, which makes this area a very strong resistance zone for us. Until this strong resistance zone holds my view remains bearish here and I expect the price to continue lower further.
GBPNZD D1(Daily) Chart Analysis
GBPNZD H4(4 Hours) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this sell setup then you can use any setup and strategy that you have in your arsenal to look for bearish moves and join this sell trade.
Also, don’t forget to protect your sell trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
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