Post of the Day: NZD/USD

[DailyFx]

Students Question:On the daily chart for NZD/USD, the most recent candlestick is a Doji at the top of a recent uptrend. The top of the Doji's wick is at .69482. I would put the stop at approximately 20 pips below the top of the wick at .69462. I put the sell at approximately the body of the Doji at .68731.

What is your recommendation for an entry position?

I put my buy at .64914, above the bottom support line which is .64414.





Power Course Instructor’s Response:
Since this NZDUSD pair has been in a strong downtrend lately (see the chart below), we would only be looking for opportunities to sell the pair...go short.

As soon as the doji closes, one could go short with a stop above the wick on the doji...see the chart below. The point at which you indicate that the trade would be exited is valid since the pair has traded down to that level before.

Keep in mind that the 5th decimal place in this (and other) currency pairs is a fractional pip...it is not taken into account for the calculation of stops and limits. So, if we were to put a stop 20 pips above the wick on the doji, it would be at .6968.