So far so good on my NZD/JPY short forex setup! In fact, the recent selloff has been so strong that I’m considering adding to my position. Do you think that’s a good idea?
I was able to enter at market at 81.85 for 0.5% risk and I set another short order at 83.00 for another 0.5%. However, it looks like price ain’t making a large pullback to my latter entry area anytime soon so I’m considering adding on a break of the previous lows and 81.00 major psychological support level instead.
Fundamentals still support a NZD/JPY selloff, mostly due to the ongoing slump in China’s stock market. This has been working in favor of the lower-yielding yen, which is also getting a boost from better-than-expected data from Japan, and against the higher-yielding Kiwi. After all, New Zealand is already facing a large decline in milk powder exports to China and could see worse losses if consumer confidence and local demand slows further.
I’m still keeping close tabs on the Chinese government’s efforts to contain the slide in their equity market, but it looks like additional easing moves are just stirring more panic among investors. Aside from that, forex traders also seem to be accepting the reality that Greece might have no other choice but to exit the euro zone, and this scenario could spur more risk-off moves. However, I’m also wary that the EU’s five-day ultimatum could mean another event risk for the weekend, which might lead to profit-taking and an NZD/JPY bounce soon.
Think I should set a sell stop order below 81.00 or should I wait until early next week again? As always, I’d love to get your feedback!
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