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.
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!
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