Talk about a reversal of fortune! My EUR/NZD short was going pretty well but price soon staged a really sharp rally. In my initial trade idea, I was looking to play the descending channel pattern with a half position short at 1.5300 and a higher entry at 1.5375.
I was just in the middle of writing my trade update on how my second entry order got filled when the pair made a sharp break past the channel resistance and Fibs. I took this as a sign to close early before price even hit my stop loss at 1.5775, allowing me to cut my losses to just 0.25% instead of taking the full 0.50% dent. Whew!
As it turns out, the RBNZ announced that it plans on giving an updated assessment of the New Zealand economy by Thursday this week, probably shedding more light on their inflation outlook and lending adjustments for the housing sector. Policymakers are actually proposing tighter lending conditions to keep property prices in check, likely giving them room to cut rates if necessary.
To top it off, the euro also got a boost from the BOE’s decision to refrain from cutting interest rates since this led some traders to speculate that the ECB might hold its fire during their policy statement this week as well.
I’m a bit bummed out about not being able to hold on to my early gains for this trade, but I’m still happy about my decision to exit early. Here’s how it turned out:
P/L: -217.5 pips (average) / -0.25%
With these updates from New Zealand, I’m thinking of switching to a short Kiwi bias for now. Any setups you think I should be looking at?