The next commodity Fx pair that we will look at is NZDUSD as part of our series on the characteristics of price action of the major Forex pairs.
Characteristics of NZDUSD
The closest cousin of the AUDUSD pair, NZDUSD is highly correlated with AUDUSD. Its trading characteristics and the behavior of price action on NZDUSD are therefore very similar to the ones seen on the charts of AUDUSD. The price generally moves in orderly steps especially on the larger timeframes such as 4-hour, daily and higher, although fake breakouts can occur from time to time.
NZDUSD most of the time trades in a swingy fashion. That is the price tends to move in swings which is probably what makes the pair very well suited for swing trading. The quite often and frequent formation of trendlines and channels further strengthens the swing trading characteristics of the NZDUSD major pair, but also of other NZD pairs too.
This means that like AUDUSD, NZDUSD also retraces much of the moves, either up or down. Trendlines hold generally well. When a trendline that has held for a while is broken it’s a solid signal that the trend has reversed. Horizontal support and resistance also work well but are also overshot by the price sometimes (meaning the price can first push through them before reversing later). Fibonacci retracements and extensions ratios and patterns based on the Fibonacci levels such as the Harmonic patterns also tend to work very well on NZDUSD.
Long trade entry:
Short trade entry:
Some of the typical behavior of NZDUSD on the charts
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