We have a rather good trading setup on GBPNZD 1h.
We must admit it’s not the greatest but it’s definitely a valid one and it is reinforced by the major resistance level at the top.
In fact, if we check the list of our usual conditions we can say that:
- The price and the RSI Exhaustion are NOT technically diverging (this is the weak sign of the setup and it’s something we don’t like)
- The RSI Exhaustion is bullish exhausted
- We have a confirmed top (displayed by the Bottoms Tops Signal)
Unfortunately, condition 1 (divergence between the price and the RSI Exhaustion) is not satisfied.
However, all the other conditions are perfect, and moreover, the price is currently just below a major price level (resistance) which played out very well in the past and so should do again now.
Because of this, we get into this trade by setting the target a bit lower than the major support at the bottom because we identify a recently-formed price action key level there.
Of course, it’s a bit risky because the price might stop its downward movement at the support level, but if that happens, we are far away from the entry price and so we will be able to play with the breakeven level.