Forex Review: Short EUR/NZD & USD/JPY Trades

Before I head off into the weekend, gotta do a quick forex review on a couple of ideas that just closed today: EUR/NZD and USD/JPY short plays.

Short EUR/NZD

Original Trade Idea: Forex Trade Idea: EUR/NZD Falling Trendline

EUR/NZD 4-Hour Forex Chart

EUR/NZD 4-Hour Forex Chart

Not too long after adjusting my stops, my EUR/NZD position was taken out on a broad risk aversion reaction to the monthly U.S. employment data. The headline number of 215K did beat expectations of a net addition of 205K jobs, but the unemployment rate did tick higher to 5.0% from 4.9%.  The tick up in unemployment was attributed to more participants entering the job market, overshadowing the steady improvements in job growth, and likely keeping the Fed at bay from hiking rates in the near-term.

So, there was a risk-off move right off the bat as the numbers were taken as positive initially, taking EUR/NZD up to my adjusted stop at 1.6575 to close out my trade for a very small gain just under my entry price:

Total: +25 pips/ +0.03% gain on 0.50% risk

The only thing I probably should have done different was to trail my stop much sooner after the drop in EUR/NZD as the trade max out at around +335 pips before finding a short-term bottom on Wednesday. At the time, I thought 1.6500 would be the line in the sand to draw in more sellers, but unfortunately I was wrong and gave up a good chunk in the process. It stinks, but I think I still have a chance to jump back into the downtrend if risk aversion makes another comeback in the coming weeks.

Short USD/JPY

Original Trade Idea: Forex Trade Idea: USD/JPY Range Play

USD/JPY 4-Hour Forex Chart

USD/JPY 4-Hour Forex Chart

This was a beautiful textbook range setup on USD/JPY, but it just couldn’t get up to my short entry orders at 114.00 before dropping like a hot potato!  The sell off was due to this week’s comments from Fed Chair Janet Yellen, restating that the current environment warrants a slower pace of rate hikes that previously thought in December.

The Greenback was immediately smacked lower across the board, taking the pair far, far away from my entry after getting as close as 20 pips away before forex sellers pounced on it like a lion. Needless to say, this was a missed trade now that the pair has dropped over 200 pips since Yellen’s speech, and with the weekend quickly approaching, I decided to close my short orders at 114.00.  No trade. 

So, that’s two solid ideas where the market played out as I hoped they would, but my trade management (USD/JPY entry and EUR/NZD adjustment) plan held me back from taking advantage of the moves. Definitely something to reflect over this weekend as I work on my quarterly forex trading review and reflection.  Stay tuned for that next week, and until then, have a great weekend!