Forex Trade Idea: NZD/CAD Long Breakout

With all the hoopla around the upcoming Fed meeting, I’m going with a currency-cross to hopefully avoid the potential market madness. Here’s a simple trend breakout setup on NZD/CAD.

NZD/CAD 4-Hour Forex Chart

NZD/CAD 4-Hour Forex Chart

This is a simple forex setup playing the recent rally in the Kiwi (after a rate cut) and the super strong selling sentiment on CAD thanks to the price of oil being destroyed. Combined, that makes for a nice uptrend in NZD/CAD, which recently broke above a swing high around the .9000 handle.

Since breaking out, the pair has made it’s way to .9300 where I think we could see the rally run out of legs as the market hits the 100% Fib extension level and as the stochastic indicator shows potentially overbought conditions. If the pair falls from here and retests the broken resistance level, I look to scale into a long position on the potential for buyers to hop in. ┬áMy max stop is below the 200-MA while my max target is the last major swing high last seen in March of 2015 for a nice R:R trade. ┬áHere’s what I’m doing:

Long quarter position NZD/CAD at .9100, max stop at .8700, max profit target at .9600

Long quarter position NZD/CAD at .8900, max stop at .8700, max profit target at .9600

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 follow what I do. Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 2.25:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!