Today’s pick is a basic play. We have the NZDUSD downtrending. It’s a chart we’ve all seen plenty of times. Sometimes there’s a break to the upside to the 200 SMA then reversal, but this time I think it will go down from the 100 SMA. So with a break of the pivot and 50 SMA, I will go short for 10 pips. My stop will be 10 – 20 pips above the pivot point. My aggressive target will be the S1 line.
A possible long play is a break and candle close above the R2 line. Going for 10 pips or until it hits the 200 SMA. Set stop 10 – 20 pips below the R2 line.
A quick return to my stop loss rule…always set your stop so that it is not more than 3% – 5% of your account. In this case if it’s 10 pips above the pivot point then set it there. If you can do 20 pips, set it at 20 pips above stop.