1. NZDUSD (Daily Chart) – Power Pivot Trade Short 15.07.2014 – This pair gave its final push higher last week before putting in the evidence that it was due a move lower. Price had reached a very significant horizontal level just above 0.8800 where price action gave stalling signs, firstly a doji seller bar then closely followed by two further high test seller bars. Selling pressure was evident simply from the consecutive price action over the past 3 daily bars. The important factor here was to see evidence that a reversal was likely. This came in the form of stochastic divergence, in fact triple divergence was visible on the past 3 peaks, giving confidence that a reversal was imminent. A nice healthy fib extension to the 1.272 was the final piece needed before placing the power pivot order, entry under the low of Monday’s bar, stop above the swing high. The market then proceeded to head lower, hitting target at the 0.8700 big round number and significant horizontal support level for just shy of +2%.
2. GBPNZD (Daily Chart) – Power Pivot Trade Long – 15.07.2014 – The pair has been in a lovely channel for the past 3.5 months, providing traders with excellent support and resistance levels to trade from. This particular trade was trading off support around the big 1.9400 level. Here we saw a significant low test bar form, hinting buyers were moving back in and this was supported by some subtle hidden divergence, hinting the market was ready to change direction. Trading the low test bar formation on Monday as a power pivot allowed a very small pip risk on the trade, allowing for a nice healthy reward of +2% by taking profit at the top of the channel.
3. GOLD (Daily Chart) – Power Pivot Trade Short 14.07.2014 – Gold last week retraced to the key 0.618 fib retracement level from March’s high. Price entered this zone strongly but come last Friday there was no follow through, simply an inside bar. This alerted traders to the fact that sellers were turning back up to the market. This confidence was increased by the visibility of the extremely strong stochastic divergence and fib overextension. Given the fact the reversal bar (inside bar) was so small meant that the potential for a high reward was possible. Trading the power pivot setup, traders would have been triggered into the trade late on Sunday, with firm follow through to the downside on Monday and Tuesday. A +1.6% profit was taken at the 1.3000 level which had been a significant level of recent support and resistance.
4. NZDCAD (Daily Chart) – Power Pivot Trade Short – 15.07.2014 – A double top pattern had formed on the daily chart around the 0.9465 level. The second peak of the pattern broke slightly higher than the first however this was not matched by the stochastic and thus we had divergence at play hinting a reversal was imminent. Finally the strong reversal seller bar which formed on Monday, gave the final sign the sellers were ready to dominate. Traders were efficiently entered under the low of Monday, with a nice protective stop just above the double top pattern. Price then sunk lower during the week, reaching just over +1% allowing stops to be moved to break even.
5. Platinum (Daily Chart) – Power Pivot Trade Short – 14.07.2014 – Platinum, in a similar way to the NZDCAD trade above, had put in a double top formation alongside stochastic divergence. Two key elements when looking for a potential reversal. Friday’s bar was significant as it finished as an inside bar, confirming that buyers did not have the strength to push it higher. When this happens, the other side of the market starts to kick in. On Monday we saw just that with sellers breaking the market lower, triggering entries below Fridays low (stops above the swing high) and continuing on Tuesday and Wednesday right into the target level (previous horizontal resistance. The trade reached +1.4%.