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  • GBP/NZD bears are looking for an optimal entry to board the monthly 3-wave cycle. 
  • A top-down analysis illustrates where there is a high probability setup to short the cross. 

Bears are in control in bearish conditions across the monthly, weekly and daily time frames. 

The confluence of bearish price action across the time frames offers a higher probability trading opportunity. 

The following is top-down analysis to illustrate where an optimal entry can be found on the daily and 4-hour time frame for a 1:3 risk to reward setup. 

Monthly chart

The monthly chart offers a 3-wave bearish scenario. 

The wick, eclipsed in the above chart, is expected to be filled in.

The wick essentially represents the following weekly 3-wave price action:

Weekly chart

The price is in the process of wave-3 on the weekly chart and has the potential to extend to the downside and beyond prior support. 

Daily chart

The daily chart shows that the price is below the counter trendline and prior support structure.

This offers a bearish environment for bears to seek an optimal entry point if a sell limit is placed at the structure. 

Bulls will need to step up, however, in adverse conditions which will offer a discount for the bears.

4-hour setup 1:3 R/R

The 4-hour time frame is already bearish so a sell-limit can be placed for a discount on position entry at the structure, protected by a stop loss above higher structure. 

This entry, with a target to the daily structure, offers a 1:3 risk to reward opportunity. 

The stop loss can be moved to breakeven as soon as there is new resistance structure formed, expected to prevent the price from moving up.