Interesting setup on the exotic instrument (NZDSGD)
Alpari Research & Analysis | Nov 06, 2017 05:26AM ET
Sometimes traders get too obsessed with the major pair on the market and they trade them even without a proper trading signal. As a technical trader, sometimes you should not about the fact if this pair is a major or an exotic instrument and just go for a nice price action setup.
In this case, we spotted a nice occasion on the NZDSGD, a pair which probably you didn't even know that is available on your platform. Currently the pair is declining sharply and all odds are in the favour of the sellers. Since the end of July, the pair is in the strong downtrend. First big troubles started at the beginning of the October, when we broke the long-term up trendline (black). That changed the game and the price easily broke two horizontal supports: 0.956 (grey) and 0.946 (red). The second one is super important in the long-term as it was respected many times in the first half of the 2016 (both as a support and resistance).
Currently, as expected by the Price Action rules, the price is testing 0.946 as a closest resistance. First contact is good sellers, as the price bounced and is heading lower. That opens a way to the support on the 0.914 (green area, 2016 lows). As a result, we have a great trading opportunity in terms of the risk to reward ratio (high potential profit and small loss). Sentiment stays negative as long as the price is kept below the red area.
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