NZD/USD Falling Channel: Short Opportunity? – Trade Closed

Trade Update: 2011-01-25 1:48

Kiwi closed trade

Boo hoo! Yesterday’s comdoll rally stopped out my NZD/USD short trade! Thank goodness a trailing stop trimmed my losses like my new fitness regimen trimmed my waist line!

Dollar weakness, combined with a hawkish RBA statement, pushed NZD/USD above the .7800 area and hit my original stop at .7825. Good thing I was out of the trade early, at .7761, because I used a trailing stop on this short trade.

Phew! I’m still a bit disappointed though since my trade was already up by more than 60 pips before the pair started to pull up from its drop. I probably should’ve locked in some of my winnings at the closest psychological level (.7700) instead of being very ambitious and putting my first PT at .7600.

Hmm, I probably should reduce my girls’ nights out too, so I’ll have more time to watch my charts. Uh-oh, how am I gonna break it to my girls?

Anyway, here’s how my trade turned out:

P/L: -11 pips / -0.15%

Crossing my fingers that my next trades bring me pips!

Trade Idea: 2011-01-26 3:02

PoD Chart

It’s time for another good vibes-filled trade! This week I decided to go back to the Kiwi, but this time on the other side of the fence. Will the Kiwi bears give me more pips with this one?

Yesterday the Greenback lost some of its shine on a bit of risk appetite in the euro zone and the not-so cool housing data in the US, but judging from the recent reports, I think that it won’t take long before fundamentals weigh on the Kiwi.

For one, my friends are telling me that the big FOMC statement due a few hours from now would be good for the dollar. This is probably because the U.S. has been showing positive economic results for the past few weeks, and there’s a good chance that the Fed will become more optimistic on the economy.

On the other side of the baking sheet, analysts are expecting gloomy thoughts from the Reserve Bank of New Zealand. Aside from threats of China implementing more tightening on its economy, a lot of investors think that the effects of all the flooding in Australia will spill on New Zealand, its close trading partner. The comdoll connection might weigh on the New Zealand economy, and would most likely keep the RBNZ from raising interest rates.

From the technical point of view, I saw setup in NZD/USD’s chart that’s both simple and yummy, much like my mac-and-cheese recipe.

I plan on playing the falling channel that Big Pippin pointed out on the 4-hour chart today, so I set my short order at .7750, which is right at the top of the channel. I put my stop loss at .7825 because it’s above the previous week’s high and the psychological .7800 handle.

Stochastic is at the overbought area right now, which means that the hungry Kiwi bears’ stomachs are grumbling. However, I figured the upcoming FOMC and RBNZ statement could provide enough volatility to push the pair to my entry price before sliding back down.

Then, I put my first profit target at .7600, not just because it’s an area of resistance, but it’s also right around the middle of the channel. Plus, I noticed that the rising trend line on the daily chart is still holding and could act as support for the pair. Lastly, my second profit target is placed at .7500 near the bottom of the channel.

Here’s my recipe for pips:

Short NZD/USD at .7750, 75-pip trailing stop initially set at .7825, pt1 at .7600, pt2 at .7500.

While I’m pretty happy with my past two wins, I’m hoping that this short Kiwi trade turns out much better than those. I’ll keep my fingers crossed until it hits both my targets!

Until then, hit me up on MeetPips.com or drop a comment or two below. I’ll keep y’all posted!

  • Mudder

    Did the BNZ news break your sl? Big spike this afternoon after the news.

  • happypip

    Hey Mudder, it hasn’t reached my SL yet. In fact, my trade hasn’t gotten triggered as of now. Maybe it will later and hopefully resistance holds. Wish me luck!

  • Mudder

    Did the BNZ news break your sl? Big spike this afternoon after the news.

  • happypip

    Hey Mudder, it hasn’t reached my SL yet. In fact, my trade hasn’t gotten triggered as of now. Maybe it will later and hopefully resistance holds. Wish me luck!

  • Pipster4lyphe

    Good one Happy!! Keep ‘em coming!!

  • Pipster4lyphe

    Good one Happy!! Keep ‘em coming!!