Timing in forex – flash NZD/USD case study
Skerdian Meta • 2 min read
What´s the most common phrase in forex? The trend is your friend. I bet you´ve heard it thousands of times, so it doesn´t take a genius to guess that. That´s true, the trend is very important but so is the timing. By timing, I mean the time of the execution of the trade, the timing of entering and exiting a forex trade.
You might go with the flow and follow the trend, but you know that the trends don't just unfold in a straight line. There are always pullbacks and stop hunting. You see a certain forex pair being in a strong uptrend for days, so you normally open a buy forex trade. That´s the right trade idea but not the right timing and consequently not the right execution .
We believed the 50 moving average would bring an end to this retrace down
That´s the problem with NZD/USD right now or better say a couple of hours ago. This forex pair has been in an uptrend in the last year. Yesterday evening we also had some great numbers from the New Zealand employment sector, as well as some good inflation figures. The price jumped up about 50 pips and during the night it retraced down.
This morning it reached the 50 moving average on the h1 forex chart so we decided to open a buy forex signal for 3 reasons:
1 – This forex pair in an uptrend
2 – It reached the oversold levels in the H1 forex chart
3 – The 50 moving average was providing support
But, we forgot the 4th indicator, the market sentiment. Yes, this forex pair has been in a long term uptrend but the intraday market sentiment has been down since the jump after the economic data release yesterday evening. Good timing would be if we had waited for the short term bearish sentiment to end. This forex trade is far from over because the 100 MA is providing support, but just to keep in mind that we forex traders must analyze all the factors and indicators to get the right timing, because retraces in an uptrend might be bigger than our pockets, even though we pick the right direction. We will elaborate further in details on this topic in an upcoming editorial article.