Forex Breakout Setups on the NZDUSD and GBPAUD with Lots of Pip Potential

This week’s Forex market has started out with EUR, AUD and NZD strength and GBP and USD weakness – see the screenshot of the Winners Edge Forex Power Indicator here below.

When I match the weak pairs and strong pairs together then various pairs such as GBPAUD short and NZDUSD long seem to be appealing.

This post reviews these pairs and analyzes whether there are good trade setups available.

24- 3- 2015 forex power indicator


A recent blog post on the NZD recovery provided the opportunity to capitalize on anything from +250 up to +450 pips of profit on one single winning trade on the EURNZD (go here for details of that setup). Does the NZDUSD offer a potential setup?

The NZDUSD is certainly showing strong bullish daily candles… it also has an entire daily candle above the resistance trend line (red) and resistance Fibonacci retracement tool (blue).

24- 3- 2015 nzdusd daily

Simply put, I like the breakout potential of the Kiwi against the US Dollar and would be willing to trade the early reversal break.

I am looking for an entry upon the pullback to the 50% Fibonacci level (orange) at 0.7550 with a stop loss below the bottom at 0.7417 and a target at the Fibonacci confluence at 0.7730-40.

The AUDUSD has a similar breakout. However, there are 2 important differences: this trend channel (red lines) has lasted longer AND the AUDUSD still has an important resistance nearby (orange lines). I like the NZDUSD more due to these 2 reasons.

24- 3- 2015 audusd daily


Similar shorts on the EURAUD and GBPAUD (here and here) have been mentioned very recently.

Ever since the price spike up (purple circle) the GBPAUD has been continuously failing lower and lower. At first, price was in a mild angled bearish channel, which had the same characteristics as a bull flag chart pattern (blue trend lines).

Price has been picking up speed quickly and a daily candle pushed through the bottom of the bull flag channel (blue trend lines) creating a reversal scenario.

I see 2 trade setups in this current moment:

  1. An entry upon the pullback to the broken bull flag which could now provide resistance (red circle);
  2. An entry upon the break below (red arrow) the support trend line (green) and the previous daily candle low.

Stop loss placement could be either above the recent top or the higher top. Target is the horizontal bottom (blue circle).

Later on I personally would not be surprised to see a potential head and shoulders chart pattern formation on the chart (orange circles). For this to appear, price would need to bounce at support and then show a failure to break on the right side (red and green arrows).

24- 3- 2015 gbpaud daily

Did you catch the EURNZD short for +250 or +450 pips mentioned above?

Please let us know how many pips you made on that trade setup… it would be great to hear from you!

Thank you for sharing and wish you Happy Hunting!

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