Forex Update: EUR/NZD Trade Details

Yipes, my EUR/NZD forex trade ain’t looking too good at the moment! Do you think the downtrend is still valid or is it time to exit early?

I thought that a break below the short-term triangle support at the 1.6000 major psychological mark would be a sign that the pair is ready to head south, but it just popped higher by a couple hundred pips! That’s because the New Zealand quarterly CPI came in weaker than expected at 0.3% versus the projected 0.5% reading.

EUR/NZD 4-hour Forex Chart

EUR/NZD 4-hour Forex Chart

For now, it looks like resistance at the 1.6200 major psychological mark could still hold so this should be the line in the sand for my short forex trade. Apart from that, the short-term falling trend line connecting the latest highs coincides with that area. A rally beyond that would mean that further gains are in the cards.

I should’ve waited for the actual CPI release before entering a short trade, but I guess I was thinking that the results had already been priced in. Besides, I was kind of expecting a stronger reading or at least one that’s in line with expectations since dairy prices have picked up lately.

My fundamental bias for this pair is still to the downside though, as the euro zone remains in a much MUCH weaker state compared to New Zealand. After all, there have been a few signs of a rebound in China, which might keep commodity currencies supported. The upcoming euro zone PMI reports could determine whether EUR/NZD is headed south or not so I’ll be keeping close tabs on those releases.

Do you think it’s a good decision for me to keep this trade open for now or should I just cut losses? As always, I look forward to seeing your feedback!

Cheers,

Happy time

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  • ForExchange

    Hi HappyPip!

    If it helps I am also in the same trade. I entered it at 1.6088 and it is in -51 pips at the moment. I do not consider it though as an invalid trade. That is of course only my opinion. I made very nice gains yesterday, the news just came out very bad. More than that, the EUR news came out mostly positive so basically everything went the opposite way as it would have been good to us. Still, considering all the bad news, the -51 pips show me that EUR is very weak. If it was the other way around NZD would have made probably hundreds of pips already.

    I think the one part which was maybe not good to open your trade just before the news. You most likely should have opened it earlier like I did, or waiting until the end of the news. But this way you opened it almost on the lowest point.

    I made a big mistake though, I forgot the NZD CPI report. That is bad, because I would have closed the trade with a nice profit. I see it a bit differently than you, I think the negative suprise was more in the cards than a positive reading. As you also said, a positive dairy price change is good but the effects will be out there later. I think this negative reading still has more to do with weak past data than with the current positive price change.

    I will definitely still let running the trade.

    Good luck to you,

    FE

    • Thanks for sharing your thoughts! Yep, in retrospect I really should’ve been more patient with my entry. I’m still keeping this open since the rally failed to show momentum past 1.6200. Let’s see how it goes!

  • Kent Onomatopoeia Cook

    Since October 8, the highs and lows have both been lower, signalling that you are likely on the correct side of this trade on a daily time frame. I’m scalping long for today based on short term technical strength, but intend to enter short around the 1.6200 handle.

    • Thanks for the encouraging words! Yep, looks like an entry at 1.6200 would’ve been much MUCH better since it lines up with the longer-term falling trend line. Best of luck to us!

  • Phew, thanks for the supportive comment! Where’s your stop? Long-term fundamentals does support a short trade but it looks like the pop higher was pretty strong.

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