Time to Add to My GBP/NZD Short?

Guess what? GBP/NZD is now retracing to a better entry area! I really should’ve been more patient with this short forex setup, as price did eventually pull back to the broken support zone. I was so worried about missing the boat that I shorted at market right at the bottom.

GBP/NZD 4-hour Forex Chart

GBP/NZD 4-hour Forex Chart

Good thing I decided to keep a really wide stop for this one, as I figured that this pair moves more than 200 pips in a day. I’ve risked half my usual position size on my market entry at 1.9700 too so I still have room to add another half around the 2.0000-2.0100 broken support.

Fundamentally speaking, the BOE minutes did turn out to be a bit of a surprise for the pound, as policymakers seemed less dovish than expected. However, the fact that BOE Governor Carney pushed back rate hike expectations recently might still weigh on the currency. As for the Kiwi, remarks from Finance Minister English saying that the currency is already trading around sustainable levels could keep it afloat.

With that, I’m still expecting GBP/NZD to resume its selloff sooner or later. I’ll be watching the 2.0000-2.0100 area closely to see if any confirmation signals or reversal candlesticks form before I add to my short position. What do you think?

Cheers!

Happy time

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  • ForExchange

    Hi Happy Pip,

    I think everything you wrote makes sense. The 2.0000 resistance holds good and the fundamental reasons are also great. Very nice analysis. In case you enter the trade I wish you good luck with it!

    FE

    • Thanks for the supportive words! I’m holding on to this for quite some time so I’m comfortable with a wide stop and another position added. Good luck with your trades too!

  • Pedro Vieira

    Hi…

    Attention because GBP/NZD is inside a equidistant channel since April 2013. Only a breakout of channel will confirm the new downtrend.

    Happy trade 🙂

    • Ooh, thanks for sharing this one! Did you have a trade open on this pair?

    • ForExchange

      Hi Pedro,

      It is a nice chart but I do not think that it qualifies for a channel. On the upper side you drew a line based on one point. You cannot draw a channel only with one point! On the other side you just entered the second bottom point now, which is ok but definitely does not show a strong pattern at this moment. However you are right that there is an uptrend. Of course I am still short on it 🙂

      FE

  • I’ve got a pretty wide stop at 2.0200.

  • Nope not yet, just waiting for a bit more confirmation. I’ll see how the BOE statement goes first.