Thursday, May 24, 2012

How can we trade the bearish divergence in the GBP/NZD?

The GBP/NZD reached a daily resistance around 2.1038 level. The technical indicators, like the daily RSI, are showing a clear overbought area. But the fact that pair created a daily Macd divergence during the last trading sessions is a possible sign to a correction. Therefore any attempt to break the resistance will be dangerous to trade on the long side. So, how can we trade the bearish divergence in the GBP/NZD? One of the main keys to success in trading is patience. Wait for the pair to retest the resistance’ then we’ll look for 2 things. One, the slope of the Macd histogram should be lower than the previous day. The Second sign that we will look for will be a bearish candle on the daily chart closing below 2.1038. If this scenario will fulfill, then the entry point to a short position will be below daily low. SL should be place above daily high and TP could be place near the support level at 2.0600.

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