I haven’t had much luck waiting for confirmation on my comdoll cross trade setups so I thought of playing it simple with a good ol’ dollar pair this time. Here’s my forex trade idea on NZD/USD.
I’ve been seeing this rising wedge pattern on Big Pippin’s Daily Forex Chart Art for quite some time, and I think that the path of least resistance is to the downside. I already thought of shorting at the wedge resistance near .7750 but I hesitated to put orders right before the FOMC statement and the RBNZ announcement.
Thanks to the RBNZ’s dovish tone in their latest rate statement, I’ve decided to take a long-term bearish bias on the Kiwi. Even though Governor Graeme Wheeler and his men decided to keep interest rates on hold for now, they did mention that they could announce another cut if economic performance weakens.
As for the U.S. dollar, well, I think that the dollar could be able to resume is rallies soon enough since the FOMC reassured market watchers that the slowdown is just temporary. The Fed is still the only central bank looking to tighten monetary policy soon and this might be enough to keep the Greenback supported.
I’m eyeing a potential short on the break of the rising wedge support, so I’m gonna set a sell stop order just below .7600 with a stop near the previous highs. Stochastic is moving south, which confirms that Kiwi bears are strong enough to drag the pair much lower. Since the forex chart pattern is roughly 500 pips in height, I’ll be setting a profit target of around the same size but I’ll be ready to trail my stop.
Here are the details:
Short NZD/USD at .7575, stop loss at .7775, profit target at .7100.
I’ll be risking 1% of my account on this swing trade setup and I’ll be making trade adjustments along the way so stay tuned!
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