Ahh, that bullish pennant turned out to be a rising wedge, which broke down to start a forex market correction… I wish I had been much more patient with this one!
If you’re wondering what this is all about, make sure you read my initial GBP/NZD forex trade idea first.
Price had actually been moving in my trade’s favor, thanks to upbeat data from the U.K. last week. I thought that there was no way that Kiwi bulls would come out to play, knowing that the RBNZ is likely to cut interest rates again next month. However, earlier today, the PBOC announced that they’d be injecting additional liquidity in their economy in order to keep growth supported. This triggered a rally for the commodity currencies, as stimulus in China could translate to stronger demand for their raw material exports.
With that, GBP/NZD eventually tumbled all the way down to my stop at the 2.2700 major psychological level before I could even cut my losses. I’m still overall bullish on this pair, though, so I’m taking this recent selloff as a sign that a retracement from the longer-term trend is taking place.
For now, I’ve got this huge dent on my account:
P/L: -300 pips / 1.00%
Got any forex trade ideas you’d like to share with me?
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