The 0.6881-837 has now stalled the fall 4 separate times
The NZDUSD has developed a key floor area that keeps on providing firm footing for buyers on dips that level comes in at 0.6881-837.
Looking at the 4-hour chart above, the floor held on May 21, May 23, May 30 and again on the test today on June 19th. Four separate tests have led to 4 separate holds. The previous 3 tests led to bounces of 89 pips, 74 pips, and 178 pips. The current bounce off the low today has only been good for 28 pips so far (from the low to the high corrective price). It's early though and all it takes is a rebound in stocks tomorrow.
What if the 5th test is the charm, and the price breaks and runs lower instead?
That's trading folks. We look to find those areas where the traders step in and lean.
They leaned earlier today, and the price moved higher. Just because it did not go 74 pips or 89 pips or 178 pips like the last times (over time) is not predictable. What we do know if the level holds, we can use the level to define and limit risk. If it stays above, we are in the money. If it breaks we take a small loss and get out.
Right now with the price at 0.6898, risk is about 20 or so pips for those looking to buy. If you like that risk, and the market agrees and does not stop you out, the upside can be greater than your risk.
If you don't want to risk 20 pips, buy a dip if the price goes a little lower and risk less.
If you are short and are bearish the risk currency pair (like the NZDUSD), don't buy. You man also consider selling on a break of the floor instead (or find a correction level to sell).
The floor is set. Will it keep holding the weight of the market selling? Only if the sellers keep turning around and buying against the level. That's good information to know as a trader.
