Pound and yen weakness seem to be the main market themes these days so I’m making my moves in these GBP/NZD and AUD/JPY setups. Make sure you check out my initial trade ideas before reading on!
In my trade watchlist blog post for this pair’s symmetrical triangle, I mentioned that I’ve got a bullish bias on AUD/JPY mostly because of diverging policies between the RBA and the BOJ. While the former has suggested that it might not be looking to cut rates further, the latter is still open to the idea of additional stimulus.
However, I wasn’t inclined to put any orders in ahead of this week’s RBA decision so I decided to hold out and wait patiently for direction from price action. So far, it looks like yen bears have been dominating so I hopped in a small long position at market (78.85).
I’ve set my stop below the 76.00 major psychological support and near-term floor, which also puts it below the triangle support. I plan on adding on a pullback to the broken triangle resistance or when AUD/JPY shows more upside momentum past 80.00. Since the chart pattern is approximately 700 pips tall, I’ll be aiming for roughly the same amount as my target for roughly a 2:1 return-on-risk.
As for my GBP/NZD trade, I’m seeing signs of a pullback to that area of interest I was looking at so I’ll be adding to my position on this support turned resistance level. It happens to coincide with the 61.8% Fibonacci retracement level and the longer-term descending trend line, too!
My stop is comfortably past the 1.8000 handle so I’m not too worried at this point. Besides, most pound pairs have been lower across the board even with upbeat U.K. PMI reports so I’m thinking GBP/NZD could soon follow along.
With these two positions, I’ve got an average entry price of 1.7700, which should give me a 3:1 return-on-risk if price falls by around a thousand pips or the same height as the descending triangle pattern I was watching.
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.