AUD/NZD Short Setup? Swing Failure Pattern

While I prefer to trade cryptos over regular FX crosses, I always look for potential trades in the “legacy” markets. It's no secret that Bitcoin and Ethereum drive the crypto market. So altcoins are heavily affected by the moves of these two (BTC and ETH). So if we get it wrong on BTC, it's very likely we will get it wrong on altcoins. Because of this, I sometimes enjoy looking for setups in assets less correlated to the crypto market.

Today, I found what I believe may be a solid setup for a short trade in AUD/NZD. If you want to take this trade with me, make sure to sign up for an account with PrimeXBT where you can trade bitcoin, many different altcoins, FX and indices.

First of all, if we look at the daily chart on AUDNZD, we can see we got a level of resistance at 1.14756. This was actually tested earlier this morning, and since then, we have seen a drop down to 1.1428.

Now, if we zoom out to the weekly chart and pull a fixed range from July 1985 and up until Feb. 2014, where we broke down below that range, we can see the value area low aligns close to our daily level. That value area low should act as a strong level of resistance, along with the daily level of resistance.

Now, if we pull the Fibonacci retracement from the swing high from 1.38 and down to the recent swing low at 0.9990, we can see the 0.382 retracement level is placed right between the daily level and the value area low.

Finally, a break of the 1.1430 level (which we just had) is definitely an area of liquidity where we are likely to see a swing failure pattern (a liquidity grab, stop loss hunt, etc.). We would like to see a quick move above the recent swing high at 1.1430 and then a move back down below. Now we did just have the break of this level earlier today, and currently, AUDNZD is trading ten pips below this level.

So we have multiple reasons (confluence) to look for a short trade here. I did just enter into one earlier this morning. I think there is still time to get in and a chance for this to play out as a profitable trade. I have my stop loss for this trade at 1.1500 as I don't really want to see this move above the daily level (also considering that we have the value are low and the 0.382 fib. retracement levels below the daily.

If you want to take this trade with me, sign up for an account with PrimeXBT where you can trade both Bitcoin, many different Altcoins, regular FX and indices.