My stop loss got hit on a pullback but this trade’s still a good win in my book, thanks to the adjustments I made. Before reading on, for those who are not familiar with my framework, signals, setups, or acronyms, please visit my discretionary trading framework blog.
If you recall from my initial setup, I was able to short EUR/NZD on a test of the resistance visible on longer-term time frames. Price consolidated in that area for a while before eventually showing bearish momentum, as speculations for a dovish ECB statement were building up. I actually considered adding another half position on a pullback but decided against it ahead of the actual ECB announcement.
Sellers stayed in control after ECB head Draghi was his usual downbeat self then, allowing EUR/NZD to break below the 1.6340 lows and create new ones at 1.6230. But with the weekend approaching, I thought it best to roll my stop lower to lock in at least 200 pips in gains in case price suddenly makes a bounce higher.
As it turns out, traders started pricing in expectations for this week’s RBNZ decision as early as Monday, forcing the Kiwi to retreat and hit my stop. With that, I was able to bag a total of +200 pips or 0.28% gain on 0.50% risk.
Now that I’ve seen how the pair has resumed its slide on the recent commodity price rally, I can’t help but wish that I set my adjusted stop a tad wider to stay in the game. Then again, price action could’ve kept going higher upon breaking past that 61.8% Fib and I know I’d be much more bummed out had I given up majority of my returns in that case.