Missed Trade: NZD/USD Resistance at .8400

Argh, not again! I had been waiting for NZD/USD to reach my entry area at the top of the range on the 4-hour time frame and for fundamentals to line up with my short bias, but price still missed my entry by a couple of pips. To think I already set my short order at .8395!

nzdusd

I should’ve jumped in at market when price turned around the .8380 mark and made a small bearish divergence after New Zealand released a weak quarterly retail sales report. At that time though, it appeared as though risk sentiment was shifting and concerns about a potential emerging market crash had eased. It didn’t help that U.S. data came in mostly weaker than expected, causing me to doubt my short bias.

Oh well, I guess it’s time to move on then! At this point, I think it’s too late for me to jump in at market and try to ride the selloff until the middle of the range. Anybody got any other trade ideas this week?

Cheers,

Happy time

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  • John

    That sucks. I was very excited when I read about your NZD/USD resistance trade. I’m a bull myself, so after reading your post I closed all my open long positions on this pair around the .8370. I was angry about the missed pips at first, but in hindsight it was the safer move.

    As for new trades, Big Pippin just released his chart art and idea for mid range support on NZD/USD at .8250. You might try that or we’ll have to wait for it to hit 0.8150.

    Did you trade the AUD/USD .9000 by any chance?

    • roberta

      I have shorted the NZD/USD yesterday at 0.8336 with a stop loss at 0.8391…however it seems that today all the profits have been erased but I am still holding on to it due to the bearish engulfing pattern formed on the daily timeframe….what do you think. I guess you can still jump in if price is only retracing. Just my opinion….

      • John

        You might be onto something. I’d definately stay in and I don’t think your stop loss will be triggered.

        The NZD is really high against the USD and reached an eight-year high of 95.3 Australian cents last month. I’d call that uncomfortably high.

        “The central bank has signaled it will become one of the first in the developed world to start raising rates this year as the economy gathers pace and inflation pressures mount, with economists and investors forecasting a hike as soon as next month.”

        Well, Westpac Banking Corp. predicts that economic growth will accelerate to 4.2 percent this year, propelled by the NZ$40 billion ($33 billion) rebuild of earthquake-damaged Christchurch and record-high terms of trade. It expects the currency to stay above .8000 USD and .9300 AUD this year. So you definately still have space left for short pips 🙂

        HOWEVER, some experts also say that “New Zealand’s economy resembles those in Europe and the emerging market just before they were engulfed by crisis — “a growth model based on debt and credit, low savings rates, and current-account deficits.”

        Ireland went from Celtic tiger to European debt-crisis victim, requesting a 67.5 billion-euro bailout in November 2010 when the near-collapse of its banks meant bond markets were shut to the country.

        New Zealand runs a relatively high current-account deficit and its economy has a “fragile core,” making it susceptible to external shocks such as slowing growth in China and the Federal Reserve’s withdrawal of monetary stimulus, the analysts wrote. ”

        So with eyes on the news, especially China and the US, you can maybe get super sweet deal out of your trade if yo stay in for the long run.

        • Happy Pip

          Yikes! Thanks for sharing that bit on New Zealand’s “fragile core”, that’s definitely a story that the surface-level economic figures don’t tell. I decided on taking an AUD short instead of NZD because of the fresh catalyst from Chinese data but I’m thinking the risk-off environment would weigh on Kiwi as well. Interesting how NZ is being compared to EZ! Let’s see how this story unfolds.

      • Happy Pip

        I think I may be a bit too late to jump in so I just took an AUD/USD short instead. The weak Chinese PMI could weigh on risk appetite for the day though so there’s still a good chance for an NZD/USD selloff. Is you trade still open?

    • Happy Pip

      Aww thanks for checking out my blog! For NZD/USD, I think the safer bet would be to wait for it to hit the bottom of the range since that support level looks stronger. I just shorted AUD/USD at market, thanks to Big Pippin’s swing setup (Fib, support-turned-resistance, psychological level, divergence) and because the weak Chinese HSBC PMI lined up for a short. How about you?