A Classical “Copy Cat” Forex Trade Setup

The GBPNZD is at an interesting bouncing spot and will soon offer a long setup.

The currency pair has reached a confluence of 2 Fibonacci targets (green circle in screenshot). Price recently hit both the “golden” -61.8 Fibonacci target (orange Fib) and the -27.2 target (blue Fib).

Price reacted strongly to this confluence (green arrow) and bounced up some 300+ pips the last couple of days. The previous bounce at the -27.2 target (purple circle) ended up making an 850 pip bullish bounce (purple arrow).

13- 1- 2015 gn

GBPNZD TRADE SETUP

I am looking for a copy of the previous GBPNZD trade. Price bounced off of the target, and then made a pullback before continuing up higher for a great rally.

In the screenshot below you will see what I mean: blue arrow (1st bounce), red arrow (retracement), bounce (green circle) and continuation (purple arrow).

13- 1- 2015 gn 2

For the current long trade setup I am waiting for the same pattern to play out. The first bounce has already occurred so now I need to wait for the retracement and/or bounce. There are 2 different methods:

  1. Pending order: I can place a pending order at a specific level without waiting for price action to confirm the turn around.
  2. Market order: I can wait for price action indeed to confirm its turn and wait for the bullish bounce to actually happen before taking the trade.

I usually choose depending on the probabilities I assess for each trade setup (although this can depend on a trader’s situation as the pending order could be a more practical solution due to time constraints and the fact that the charts cannot be monitored regularly).

  1. If I consider the trade a high probability setup, then I opt for a pending order;
  2. If I consider the trade a moderate probability setup, then I opt for a market order after I see price confirmation/candle stick patterns.

GBPNZD TRADE DETAILS

In this case I think we are looking at a pretty decent probability setup. It is high enough for me to choose the pending order. The main reason is the big Fibonacci target confluence, the presence of a major daily -61.8 target, and the presence of bigger weekly support levels around the current price levels.

Therefore, I will zoom into a lower time frame like a 1-hour chart and place a Fibonacci tool on the very first bounce. I will place the pending order at the deep 61.8 Fibonacci retracement level and not at a shallow Fib. The market was trending down so price retracing to a deeper Fib is common.

13- 1- 2015 gn 3

Pending order long at 61.8 Fib at 1.9388. Stop loss below bottom at 1.9267. Target is aimed at the -61.8 Fib at 1.9720.

The reward to risk on the trade setup is: 332 pips versus 121 pips, which is a neat 2.7:1.

Will the trade work out? Nobody ever knows for sure, even if the chances of success look right.

What do you think of the setup? Is it something for you?

Let us know down below!

Thanks for sharing and happy hunting!

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  • Chris

    Thanks for letting us know Edith! Awesome job and excellent trading !!! I went for the -61.8 target as mentioned in the post and got ‘only’ 300 pips. You managed to get really a lot of pips out of that move, big congrats!!! 🙂

  • Edith Helwegen

    I was in this trade en price hits my target yesterday with 914,8 pips

  • Chris

    Thanks for the comment Edith! It bounced up a bit earlier than I wanted but still waiting for the pullback.

  • Edith Helwegen

    It is indeed on my watchlist. On the weekly timeframe, price is in a channel and bounced of the trendline.