I have a little corny joke for y’all… What did stochastic say to NZD/CHF price action when it started making higher lows? I am DIVERGENT!
Kidding aside, I did see a nice bullish divergence about to play out on this pair since stochastic has been making lower lows. This suggests that the broken resistance around the .7600 handle might hold as support, as it also lines up with the 38.2% Fib level.
If the correction is over, NZD/CHF could resume its climb and test the former highs around the .7700 major psychological resistance. If a deeper pullback takes place, there’s another resistance-turned-support area around the 61.8% Fib level and I’m planning on setting my stop below that area.
As I discussed in my Q1 2014 Trade Performance Review, I will try to be gutsy enough to take risks (well, calculated risks) so I decided to jump in at market! After all, fundamentals are looking bright for New Zealand and the RBNZ remains one of the most hawkish major central banks. Switzerland, on the other hand, has seen its fair share of bleak data recently and the SNB is still intent on keeping the franc weak.
Here’s what I have:
Long NZD/CHF at .7585, stop loss at 0.7485, first profit target at .7700. I’m risking my usual 0.5% on this trade and y’all better look at our risk disclosure if you’re planning on taking this trade as well.
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