NZD/CAD Analysis: Liquidity and Supply Zone Reaction Timeframe:
NZD/CAD Analysis: Liquidity and Supply Zone Reaction
Timeframe: 4-Hour
Overview:
This analysis focuses on the current price structure and potential setups for NZD/CAD. The market is approaching a significant point of interest (POI) at a supply zone, where a high probability of price reaction is expected. Key concepts such as liquidity grabs, imbalances, and market structure shifts are highlighted.
Key Observations:
Point of Interest (POI):
The supply zone marked between 0.8218 – 0.8258 represents an area where selling pressure previously overwhelmed buyers.
This zone aligns with previous price inefficiencies and an imbalance (imbL), making it a critical test for the current bullish momentum.
Liquidity to Take:
There’s visible liquidity resting above recent highs within the supply zone. This liquidity, highlighted as "lq to take," might attract price before a potential reversal occurs.
Smart money tends to grab liquidity before deciding the next directional move, making this a key area to watch.
Market Structure Shift (MSS):
The MSS level marked at the lower end of the chart indicates where the market shifted from a bearish to a bullish structure.
This bullish structure currently holds, but the POI could serve as a zone for a trend reversal or continuation after a retracement.
Imbalance:
The chart highlights an imbalance zone (imbL), representing an area where price moved too quickly, leaving inefficiencies in the market.
The imbalance is a magnet for price action, often serving as a draw for liquidity seekers.
Liquidity Target:
The diagonal line pointing towards "lq to target" illustrates how the market cleared sell-side liquidity before continuing upward.
The price appears to be in a liquidity-seeking phase, with the supply zone as the next likely target.
Trading Plan:
Scenario 1: Rejection from the Supply Zone
Confirmation: Watch for bearish candlestick patterns (e.g., engulfing or pin bars) in the supply zone. This signals sellers entering the market.
Entry: Enter short around 0.8218 – 0.8258, with confirmation from price action.
Stop-Loss: Above 0.8258 (beyond the zone).
Take-Profit: Target the recent liquidity sweep near 0.7998, aligning with previous demand.
Scenario 2: Breakout Above the Supply Zone
Confirmation: A strong break and close above 0.8258, followed by a pullback into the zone.
Entry: Enter long on a pullback into the broken zone (now demand).
Stop-Loss: Below 0.8218 (mid-range of the zone).
Take-Profit: Aim for higher levels, such as 0.8300+, based on higher timeframe structure.
Key Levels:
Supply Zone (Resistance): 0.8218 – 0.8258
Demand Zone (Support): 0.7998
Imbalance Zone: Around 0.8180
Conclusion:
NZD/CAD is at a critical juncture near a supply zone. Whether price rejects or breaks through will determine the next major move. Be patient and wait for price action confirmation before executing trades. This setup offers a solid risk-reward ratio for both reversal and continuation scenarios.
What do you think of this idea? Let me know your thoughts in the comments below, or feel free to share your perspective!
Timeframe: 4-Hour
Overview:
This analysis focuses on the current price structure and potential setups for NZD/CAD. The market is approaching a significant point of interest (POI) at a supply zone, where a high probability of price reaction is expected. Key concepts such as liquidity grabs, imbalances, and market structure shifts are highlighted.
Key Observations:
Point of Interest (POI):
The supply zone marked between 0.8218 – 0.8258 represents an area where selling pressure previously overwhelmed buyers.
This zone aligns with previous price inefficiencies and an imbalance (imbL), making it a critical test for the current bullish momentum.
Liquidity to Take:
There’s visible liquidity resting above recent highs within the supply zone. This liquidity, highlighted as "lq to take," might attract price before a potential reversal occurs.
Smart money tends to grab liquidity before deciding the next directional move, making this a key area to watch.
Market Structure Shift (MSS):
The MSS level marked at the lower end of the chart indicates where the market shifted from a bearish to a bullish structure.
This bullish structure currently holds, but the POI could serve as a zone for a trend reversal or continuation after a retracement.
Imbalance:
The chart highlights an imbalance zone (imbL), representing an area where price moved too quickly, leaving inefficiencies in the market.
The imbalance is a magnet for price action, often serving as a draw for liquidity seekers.
Liquidity Target:
The diagonal line pointing towards "lq to target" illustrates how the market cleared sell-side liquidity before continuing upward.
The price appears to be in a liquidity-seeking phase, with the supply zone as the next likely target.
Trading Plan:
Scenario 1: Rejection from the Supply Zone
Confirmation: Watch for bearish candlestick patterns (e.g., engulfing or pin bars) in the supply zone. This signals sellers entering the market.
Entry: Enter short around 0.8218 – 0.8258, with confirmation from price action.
Stop-Loss: Above 0.8258 (beyond the zone).
Take-Profit: Target the recent liquidity sweep near 0.7998, aligning with previous demand.
Scenario 2: Breakout Above the Supply Zone
Confirmation: A strong break and close above 0.8258, followed by a pullback into the zone.
Entry: Enter long on a pullback into the broken zone (now demand).
Stop-Loss: Below 0.8218 (mid-range of the zone).
Take-Profit: Aim for higher levels, such as 0.8300+, based on higher timeframe structure.
Key Levels:
Supply Zone (Resistance): 0.8218 – 0.8258
Demand Zone (Support): 0.7998
Imbalance Zone: Around 0.8180
Conclusion:
NZD/CAD is at a critical juncture near a supply zone. Whether price rejects or breaks through will determine the next major move. Be patient and wait for price action confirmation before executing trades. This setup offers a solid risk-reward ratio for both reversal and continuation scenarios.
What do you think of this idea? Let me know your thoughts in the comments below, or feel free to share your perspective!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.