How’s it going, forex friends? I’m trying to hop in the risk rallies these days with this short-term pullback setup on NZD/USD. As it turns out, the pair already broke above the descending triangle formation I showed y’all in my Comdoll Trading Kit so I’m looking to catch a correction to the broken resistance.
Price appears to have hit a ceiling around the .6725 area so I applied the handy-dandy Fib tool on the breakout move to spot potential retracement areas. The 50% level coincides with the .6650 minor psychological level and the broken triangle top, which might now hold as support. Stochastic is moving south anyway so Kiwi bulls are probably taking a break for now.
The lack of top-tier economic releases on this week’s calendar suggests that market sentiment could be mostly responsible for forex price action in the next few days, and it looks like risk appetite is in play. After all, fears of a global economic slowdown stemming from China appear to have faded while investors remain hopeful that a deal to cap oil production could boost commodity prices.
I’m also pricing in a bit of dollar weakness ahead of the preliminary GDP release on Friday, as analysts are expecting to see a downgrade from 0.7% to 0.4%, further dampening expectations of a Fed rate hike in March.
I haven’t set any actual entry orders yet but here’s my plan:
Long NZD/USD at .6650, stop loss at .6575, initial profit target at .6725. I’m planning to risk only 0.5% of my account on this short-term forex setup, which might give me a 1:1 return-on-risk.
What do you guys think of this play? Don’t be shy to share your thoughts on my ideas and make sure you check out our risk disclosure if you’re thinking of taking the same setup!
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