Forex Trade Review: AUD/NZD Channel Resistance

Bahh, stopped out! AUD/NZD eventually broke above that channel resistance zone I thought would hold. So much for expecting the Kiwi to get its wings back!

Before reading on and helping me figure out what I could’ve done better, make sure you take a look at my initial trade idea first.

When I shorted AUD/NZD back then, I was crossing my fingers that traders would be drawn back to the higher-yielding Kiwi sooner or later, as it offers positive carry against the Aussie. However, the RBA recently dropped its dovish bias while the Kiwi got weighed down by weak dairy prices, allowing the pair to break past the channel resistance.

AUD/NZD 4-hour Forex Chart

AUD/NZD 4-hour Forex Chart

In retrospect, I can see a few instances when I could’ve exited early. For one, a short-term triangle formed right around the 1.1000 major psychological handle, with the upside break serving as a signal that more rallies are in the cards. I could’ve closed at the break of the consolidation around the channel resistance also instead of just waiting for price to hit my stop at 1.1125.

Here’s the damage:

P/L: -150 pips / -0.5%

I guess wishful thinking got the best of me, huh? I just couldn’t shake off my bullish Kiwi bias quickly enough! Think I should close my EUR/NZD short early as well? As always, I’d appreciate getting feedback from you guys!

Cheers!

Happy time

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  • Fadadio

    Yeah the Kiwi has been getting beat up as of late, however I think you should keep your EURNZD short open, especially if the Euro CPI flash estimate falls as expected or goes even lower. This will increase the sentiment that Draghi will introduce QE to destroy any deflationary pressure sooner than expected.

    • Thanks for sharing your thoughts and for the vote of confidence! Yeah I’m still thinking that the euro is in a much weaker fundamental position compared to the Kiwi, but I’m getting a bit impatient that EUR/NZD is stuck in my entry area. Guess the positive carry while keeping it open isn’t so bad though. I hope it goes my way!

  • Yep same here! Looks like it’s stuck in that range between 1.5720 to 1.5850 for now, but the euro is still much fundamentally weaker than the Kiwi. Good luck to us!

  • Yeah I kept wishing I picked that pair instead!

  • Thanks for sharing this! I am considering switching my bias on AUDNZD after that strong upside break, just figuring out if I should wait for a pullback or just hop in. As for EURNZD, it looks like the French political drama will weigh on the pair or at least keep any gains at bay. Let’s see how it goes!

  • Jake

    Hmmm… not so sure about that. The EUR/AUD short train left the station weeks ago, right now it looks very oversold!