With a slight shift to a recent market driver and potentially volatile New Zealand data coming up, with was time to make adjustments to my open forex trades.
Original Trade Idea: Forex Trade Idea: NZD/CAD Long on Pullback
Since entering this pair long back at the beginning of the year at .9350, the pair did make a move lower into the Fibonacci retracement area, where support may come. Buyers eventually did step in, but a little too early for my plans, so I had to adjust by adding my second quarter position manually at .9160 after support held strongly around the 50% Fibonacci retracement area. Overall, the technical picture still looks pretty good (although shifting into range bound behavior), it’s the fundamental picture that has me changing my mind on this trade.
Last week, speculation arose that OPEC would act to limit output, sentiment which continued into this week. Of course, there’s nothing solid as of now, but after the beating that market has taken, I honestly think there may not be any more sellers around. I could be wrong of course, but with oil below $30, there’s more upside risk now than downside, making the short play less desirable. That translates to a possible bottom in Canadian dollar selling, or at the very least for me, to be short the Loonie any longer.
Overall, the oil and Canadian dollar has become less clear, and with top tier economic data coming up from New Zealand, I decided to close out this trade manually at .9192 for a very, very small loss.
1st quarter position: -158 pips
2nd quarter position: +32 pips
Total: -41 pips average/ -0.05% loss
So, a small scratch on the account and nothing to cry about. The only thing I think I could have done better was to be a little more patient with my first entry. But at the time, pullbacks were shallow, so even that decision might have been okay.
I’ll continue to watch NZD/CAD and if the story of OPEC reducing production is just some noise, I may consider re-entering this position long if the New Zealand data holds up.
Original Trade Idea: Forex Trade Idea: EUR/NZD Short
My freshest idea is already doing well for me, with both half positions triggered at 1.6900 and 1.7100 and moving in my direction, largely thanks to a global return to risk taking sentiment. The OPEC speculation of production slow down as a big part of that, but now I have to worry about a slew of New Zealand data coming up.
In a few hours, we’ll get the quarterly New Zealand retail sales data, followed by the quarterly inflation expectations data. Tomorrow we’ll see the Global Dairy Trade data and on Wednesday, the quarterly producer price index data. These are all top tier events with potential to move the Kiwi around, possibly against my profits.
With the market currently trading around 1.6737, I’ve decided to roll down my max stop from 1.7375 to 1.6875 to lock in a 0.45% gain and create a “risk-free” trade. So, if the data comes out terrible and pushes the Kiwi lower, I know I’ll be able to walk away from the trade with something (and more than enough to cover my tiny hit on NZD/CAD).
If the data pushes EUR/NZD lower, then I’ll be watching the 1.6500 major psychological area for a break, and if it does give way I’ll start to formulate a plan to lock in more profits and maximize my forex trade. It’s up to the market from here, but I will adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!