KIWI DECLINE SHOWS BENEFITS OF DAILY CHARTS FOR SWING & DAY TRADERS
The recent bearish move on the NZD USD has come as no surprise based on our analysis done a few days ago. This decline is in keeping with the predicted formation of a Consolidation Setup based on the types of Candlestick Patterns formed over the last few months. Whenever the market is transitioning from a Trending to a Consolidating pattern, we will usually see a pattern of Candlesticks that tell us when this will take place. This allows us to exit our positions ahead of the expected pullback to avoid overbought/sold areas and to get ready to maximize on the Pips on offer as the market starts moving in the opposite direction.
In the chart and the Video below, you can see the predicted setup of this Consolidation on the Daily Chart.
NZD USD DAILY CHART
The chart below now shows the start of the decline taking place in favour of the US Dollar. This has formed a 2nd Resistance Point to complete the Resistance Boundary as the Pennant continues to be formed.
START OF REVERSAL, FORMATION OF RESISTANCE
Section 4, Part 2 of the Trading Manual provides the various market signals that indicate the start of these Consolidations.
Knowledge of these signals will allow traders to accurately anticipate the start of reversals, despite how attractive and strong the existing trend maybe. As you can see from that Daily Chart, many traders would have believed that the NZD was going to continue higher above that Downtrend Line. This would have led them to start opening Long Positions at that area only to be taken out by the U-Turn now taking place. However, if you can spot these expected pullback areas quickly, you can change your strategy and direction and trade confidently in the new direction.
The benefits of anticipating these patterns and including them in your Trading Plan are tremendous for both Swing and Day Traders. Swing Traders will be better able to see the next 100- 300 Pip move and capture as much of this as possible with a single trade. Day Traders who target smaller profits, can trade to their targets with the knowledge that the trend will last long enough for them to consistently capture gains every day - confident in the knowledge of the factors supporting this trend.
SUMMARY OF ADVANTAGES OF IDENTIFYING THESE MARKET PATTERNS