Swing Forex Short on NZD/USD Range

Good morning forex friends! I’m checking out NZD/USD this week since volatility may pick up with important inflation data coming this week for New Zealand.

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NZD/USD 4 Hour Forex Chart

NZD/USD 4 Hour Forex Chart

In this week’s forex calendar, we’ll get the Global Dairy trade price index (dairy is NZ’s largest export) and the quarterly consumer price inflation data for New Zealand. Both are big potential market movers for the Kiwi, and with global prices in a broad trend lower, it’s likely we could see the same for both data points. One thing to know though is that the dairy trade data posted positive reads in its last two releases, and if it goes positive once again then Kiwi could move higher before hitting the usually disappointing CPI data. This potential scenario is why I’m going with a short on a move higher rather than at current levels or lower.

I’m going with NZD/USD to play these events because looking at the four hour chart, the pair has been playing a range for quite some time (.7700 – .8000) and with USD very attractive at this time because of potential rate hikes from the Fed, I like a retest of the top area to go short.  My max stop will be above the range, while my target is for the bottom of the range, and possibly further depending on the market environment.  Here’s what I’m doing:

Short full position NZD/USD at .7900, max stop at .8100, initial target at .7650

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 1.00% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.25:1. 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.  Or if the market breaks above .8000 and holds, then I may close early manually. Stay tuned by following me on Twitter and Facebook!