Faked out! So much for trying to catch a short-term triangle breakout during the release of Australia’s CPI. Here’s why I decided to cut losses on this AUD/NZD trade.
In case you’re wondering what I’m talking about, make sure you review my initial AUD/NZD trade setup and my fundamental arguments for entering a long position first. You see, I was trying to catch a continuation from an earlier bullish move, but the rally past the triangle resistance wasn’t sustained. Heck, price even turned around and broke below the pattern’s support instead!
In retrospect, I probably should’ve set my buy stop order farther away from the triangle resistance, but price was treading close to the triangle support ahead of the AU CPI release so I thought an entry past 1.0700 would be enough to confirm a break higher. I might’ve been better off watching the initial price reaction first before trying to see if the actual results were enough to dampen rate cut hopes and boost the Aussie.
Also, I could’ve cut losses earlier when price fell back inside the triangle formation but I was busy working on something else then. By the time I checked back in my trade platform, I noticed that price was already starting to break below the 1.0625 area so I decided to close early instead. Here’s the damage:
P/L: -125 pips / -0.25%
Got any trade ideas that could help me bounce back this week? As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.