Forex Trade Review: EUR/NZD

EUR/NZD rocketed higher on Thursday thanks to a combination of broad Kiwi selling and risk-off behavior against the euro finding a bid.

Original Trade Idea: EUR/NZD Breaking Major Support at 1.6000?

EUR/NZD 4 Hour Forex Chart

EUR/NZD 4 Hour Forex Chart

After moving my stop to break even in my last trade update, I tried holding onto this short play, but the trend lower just wasn’t in the cards as buyers came in around 1.59 thanks to a shift in sentiment for both currencies.

For the Kiwi, nothing has really changed from New Zealand, but it is lumped into the “risk-on” group of currencies which don’t do too well when broad risk sentiment turns negative. Asia markets got really negative this week thanks to weak China export data and the BOJ not taking further action to stimulate the economy.

On the euro side of the trade, it looks like that despite bearish sentiment from Draghi last week, the euro is finding a bid thanks to sentiment that the ECB is not expected to initiate new quantitative easing measures for now. And just like that, EUR/NZD goes on a 200 pip rally, taking me out at my adjusted stop at 1.6050.

Total: 0 pips

Looking back, I did think the market was looking overdone to the downside as 1.5850 wouldn’t break.  I did think about closing half of my position there to lock profits, but the market did look like it was on a new leg downward and I didn’t want to miss big gains going into it with a half position.

Overall, moving my stop was one of the right moves to do as signs that the trend may be over emerged.  Closing half would have been nice too, but that’s the trade off for trying to maximize my reward–nothing comes for free in the markets.

For now, I think EUR/NZD will transition into a consolidation phase until the RBNZ monetary policy event later this month, and I’ll continue to watch the market until then for another opportunity to short as I’m still biased to the downside on this pair for the long-term for now.

  • ForExchange

    Hi Cyclopip,

    what a pitty for this rally. Do you have an idea what was the catalyst for such a reversal? I wish we did not move our stop loss higher, then we would been already in the money because the pair is moving back again. I just jumped in the trade, but aim for a smaller win. What do you think about that?

    Have a nice weekend

    • cyclopip

      Hey ForExchange… jumping back in? Since we’re two different traders, and I can’t tell you how to trade, but I think if your system or method says a go, and it’s a method you tested well, then go for it. As for me, I’m staying out for now and will reassess on Monday. Have a great weekend buddy!

      • ForExchange

        Hi Cyclopip!

        Thanks, I am already out of the trade because of my trailing stop, but was still able to make some pips on the move!

        Have a great weekend too and we’ll go on with trading on Monday:-)

  • imezi

    An evening start formed on the 4 hour chart.

    • cyclopip

      Thanks for sharing Imezi… are you looking at shorting this pair too based on candle formations?

  • imezi

    I shorted based on the formation few hours before market closed for the week. I hope it’s not a terrible move, because I’m still learning!

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