GBP/NZD Price Analysis: Bears seeking a day-trade to daily support structure, 1:2.6 R/R

Developing Story

GBP/NZD has offered an opportunity to the downside, but it is a higher risk setup considering the strong corrective hourly sticks as illustrated in the hourly chart below.

The setup is such that the market is expected to melt to the downside and make an equal daily low, to fill in the wick of the daily bearish impulse from lower time frame price action having made a 50% mean reversion on the hourly chart. 

Daily chart

The above chart shows the wick that is supposed to be fille din on the lower time frames and the daily structure where supports and resistances meet.

Hourly chart

the above hourly chart shows that the correction was quite strong in relation to the bearish impulses, not something that is conducive to a high conviction price action trade setup.

However, instead, considering the time frame analysis is compelling, a lower risk can be administered to the trade. 

15-min chart

The price has already triggered ‘at market’ at a resistance structure below the trendline resistance to give a 1:2.6 risk to reward ratio (R/R) trade setup.

Breakeven is the first objective, managing risk is paramount for a strategy that relies on favourable R/R, and breakeven stop losses are essential when playing the probabilities. 

Breakeven is achieved when there is a new structure formed below the entry point that acts as a support to protect the entry point turned stop loss.