? NZD/CAD Wave 4 Pullback and Preparing for Wave 5 ?

3 min read
Adarwish

adarwish

Author

Hi Traders,

NZD/CAD is pulling back and presenting an trading opportunity once wave 4 finishes.

This article will discuss the expected scenarios for the pair during the coming days.

NZD/CAD is Challenging Wave 4

This currency pair has been in a strong uptrend. The bullish momentum is probably part of the third wave.

Price has now dropped, which is probably a signal that a wave 4 correction is taking place.

I think the pair now is in wave A from 4 and still has more expected downside before it completes the correction of wave 4.

Here are the 3 main conclusions:

  1. As wave traders know, wave 4 can continue to correct till it reaches the 38.2 %, 50% or 61.8% of wave 3.
  2. The pair is now in wave A. I like to wait until wave A and B are finished, then I can trade wave C as wave A already dropped 150 pips.
  3. Our target is -27.2 % Fibonacci level of wave A.

NZD/CAD 4 Hours Chart Using SWAT Software

Now it’s time to use the SWAT charts to pinpoint potential trade setups within the expected wave structure and patterns.

Swat charts indicate bearish price action as price broke below the 21 EMA and we are also seeing strong red bearish candles. But we need some developments to happens first before trading this pair.

Here is what we we need to see on SWAT software to set our position:

  1. Some retracement to the upside to retest the 21 EMA will be more likely.
  2. Waiting for the price to build a pattern such as a flag pattern. This will give a way to trade such a correction.
  3. Our expected target is 0.92141, traders can use trailing stops.
  4. The stop loss will be above the last fractal the price made after the break of the expected flag.

Traders can also wait for the wave 4 to be completed and trade the start of the wave 5 rather than trading wave C of wave 4 because counter trend trades are always more difficult and less reliable.

This is particularly true if the price dropped without any pattern, then we will avoid this trade and wait for wave 5 to confirm.

Good trading,

Ahmed
https://twitter.com/Adarwiah2001

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