Playing NZD/USD’s Trend Line Bounce – Trade Closed

Trade Closed: 2012-06-19 10:05
I know, I know. I should’ve let y’all know that I got stopped out at breakeven on this long trade nearly a week ago, but I was still wallowing deep in regret back then.

You see, I adjusted my stop to my entry price around .7720 for a risk-free trade but price merely dipped exactly to that level before gapping up over the weekend and making that 200-pip rally we witnessed last week. Drats!

NZD/USD Trade Closed

This feels a lot like that time I bought a pair of black designer pumps only to find that it was put on a 50% off end-of-season sale the following week. Oh, the regret. It burns!

I did think about reentering at some point but I already opened my long AUD/USD trade towards the middle of the week and I didn’t want to double my risk back then.

I could think of a bajillion ways on how I could’ve played this setup better and I’m sure you have some ideas, too. But what I’m more interested to know is this:

Did you ever go through something like this yourself? Don’t be shy to share your stories with me because I sure could use some comforting words right about now.

Trade Adjustments: 2012-06-13 7:28

Thanks to profit-taking ahead of the Greek elections and a bit of risk appetite, comdolls like the Kiwi have been gaining ground against the Greenback. Unfortunately, it looks like the .7800 handle is holding like a boss for NZD/USD. So despite the new highs that I’m seeing today, I’ve decided to move my stop loss to break even.

I’m not sure if this is the right way to go though. After all, forecasts say that the RBNZ will most likely hold its rates at 2.50%, which could prove positive for the Kiwi. Not only that, but rumors of QE3 from the Fed could escalate and boost high-yielding currencies like the comdolls.

NZD/USD .7800 Resistance

On the other hand, the Greek elections is just around the corner and there’s still a lot of uncertainty over the Spanish bond yields. Oh and need I mention the resistance at .7800?

For now I’ll move my stop loss to a bit above break-even for a no-risk trade. Hopefully the Kiwi-bullish prospects that I mentioned above will outweigh the comdoll bearish ones.

What do you think of my plan? As always, your feedback is more than welcome!

Trade Update: 2012-06-08 6:51

Oops, it seems that NZD/USD didn’t bounce as strong as I predicted it would and it appears to be pulling back to the neckline of the double bottom formation that I pointed out. The question is: Should I hold on to this trade or not?

NZD/USD Resistance Turned Support

The 4-hour time frame is showing that the pair is finding support at a former resistance area, which is right in line with the 38.2% Fibonacci retracement level. I’m crossing my fingers that this level would hold until next week’s open because I’m planning to keep my trade open much longer.

Yep, that’s right, I’ll be holding on to this trade over the weekend! Now some of you might remind me of my trading resolution of not exposing my trades to weekend risk, but hear me out. You see, I based this trade on the daily time frame and I’m looking to hold on to it for the long-term so it makes sense for me to keep it open at least until next week, right?

I do hope that I won’t regret this decision later on, but I’ll also be keeping my wide stop of 200 pips just in case the pair makes a sudden gap downwards on Monday’s open. After all, my stop is reasonably placed just below the farthest Fib level, which would give this setup enough breathing room. I’ll make my adjustments at the start of the next week depending on how price action and risk sentiment play out.

Do you think I’m making the right decision? Remember, I take your advice seriously and it’s never too late to warn me to jump out of this one if I should!

Trade Idea: 2012-06-07 4:51

After shorting the comdolls last month, I’m starting this month with a long Kiwi trade! Unlike my previous trades though, I’ll probably hold on to this trade a bit longer. That’s right, I’m looking at the daily chart this time!

NZD/USD Trend Line Bounce

NZD/USD just bounced from the rising trend line that has been holding since August 2010. Also, if we zoom in on the chart, we’ll also see that the pair had just broken a double bottom neckline. According to the School of Pipsology, that’s good for at least the height of the double bottom formation. We’re talking 200 pips in our case!

NZD/USD Neckline Break

Since no economic data will be released in New Zealand for the rest of the week, I’m relying on risk appetite to sustain the Kiwi’s gains. For one thing, the delay in the implementation of China’s new bank capital rules is helping export-related economies since it signals more loans (and more business) from China.

Of course, we can’t forget that the Kiwi is riding on Aussie strength! New Zealand’s major trading partner printed a surprisingly strong GDP report yesterday, which was followed by stronger-than-expected employment numbers a couple of hours ago.

In the euro zone, markets are optimistic that the European officials will act to protect the region from debt contagion. Lastly, the comdolls, commodities, and other high-yielding currencies are getting a boost from QE3 speculations in the U.S.

With those bullish notes in mind, I decided to join the comdoll bull camp. Here’s my plan.

Risking 0.50% of my account, I bought NZD/USD at market (.7719) and placed a 200-pip stop loss below the trend line (.7520). Profit target is yet to be determined.

I know that a 200-pip stop loss might seem big, but I’m planning on moving my stop to break even as soon as my trade goes up by 100 pips. I figured the trend line bounce would’ve been clear by then. If you’re in this trade with me, make sure you read our risk disclosure!

What do you think of my trade? Am I trading in the right direction or am I missing a few factors? As always, your opinions are most welcome!

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Hope your trades are all doing well!

Happy time

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  • Daniel

    that looks like a sweet set up. im also in :)

    • happypip

      Thanks for checking out my trade entry! Good luck to us! :)

  • Iddeka

    From the technical point of view this is a great trade but
    fundamentals have been taking the lead lately. Bernanke didn’t hit at a QE3
    this past week; data from china Friday night was dismal, with Spain needing a
    bailout fundamental look to play a key role this upcoming week as well. Let’s
    not forget that NZD does have an important news data coming out Wednesday night
    where the RBNZ is set to either hold or cut rates. Then we have the Greece elections
    coming up on the 17th. I’m
    long term with you on this trade but for the interim NZD/USD might** test new
    lows before we see a bounce

    • happypip

      All excellent points! So I guess that means I should keep my stop wide if I’m looking to hold on to this trade, right? 

  • Shadeofgreen

    Hey Happy, no worries, you made the right choice.  I’m in this trade but
    got in close to today’s low so it doesn’t seem so bad but my mantra is
    if you are playing the daily charts than stick to the daily chart point
    of view.  Watching the 1h and sometimes even the 4h will cause anyone to
    lose their poise.  I see the same bounce setup especially after today’s
    strong close so we’re looking good for next week.  I also don’t plan to
    spend too much time in this trade either.  I don’t believe you have to
    be into trades for “months” just because it’s a daily play.

    • happypip

      Thanks for the vote of confidence! I’m trying not to pay too much attention to the shorter-term time frames since it’s really tempting to exit the trade whenever a pullback occurs. You’re right, I should focus on the daily time frame since that’s where I got my technical signals to enter the trade anyway. Maybe I’d hold on to this for a week or two, at most. 

  • andy

    Yo Happy Pip!

    Any analysis using the daily chart is a trade that will be open for weeks or months. If the pattern on the daily cchart continues, then nzd/USD will hit the top of its band in 3 months or so. Nothing wrong with longer trades but it’s easy to get nervous by short term volatility, especially if it’s going the wrong way!

    I jumped into this trade with a bit too much haste. I managed to get out at breakeven because I like to use my trading account for short term stuff. The interest charges on leveraged trades dissuade me for using it for longer investments.

    whatever you decide, good luck!

    • happypip

      3 months?! Now that might be a little too long for me. Maybe a couple of weeks should be enough for me to decide whether I should keep on with this trade or not. But you’re right, looking at the shorter-term movements does make me feel very nervous and tempted to exit early. Nice work on your trade though! And thanks for the kind feedback :)

  • Anto.gj

    I’ve been waiting for this for days. I’m in @ 0.7609. It was almost time :)

    • robertok

      Lets all hope the line will hold. Am also in at 0.7703

      • robertok

        0.7603*

        • happypip

          Nice entry! Let’s see if the trend line holds *fingers crossed* Good luck to both of us!

  • alwjmonster

    don worry happypips.. you did a great job making this trade a risk free, just a bit of bad luck. However i never been through thing like this, but i believe in future i will.. aahha don’t worry so much you’re doing great, let’s forget about past, still alot of opportunity ahead, let’s move on!! 

    • happypip

      Thanks so much for the kind words! I really appreciate your trying to cheer me up :) Yep, let’s move on!

  • Sijeeva

    after breaking the thursday daily high is the good entry point is my opinion
     

    • happypip

      You have a good point, mate! Gonna jump in at that point?

  • Flytyphoon

    I bailed on it. Started to get out of my comfort zone, despite the S/L.

    • happypip

      Oh, that’s too bad. You could’ve made some pips off the upside gap over the weekend, but I guess cutting your risk is a more prudent decision especially if it’s out of your comfort zone already. Hope you didn’t take such a huge hit on your account though.

  • Dewa Forex

    I go with you. Let’s pray on this… :-)

    • happypip

       Thanks! Do you have a long NZD trade too? :)

  • Lilpixie

    bought @ 0.7701, and will close when it move up 100 pips 

    • happypip

      Cool, you’re in the trade with me! But you got in at a better price, haha. Where did you place your stop loss?

      • Lilpixie

         i havent decide on the stop loss, but hopefully can reach 100 pips by today *pray*

        • Lilpixie

          sold mine @ 0.7994 yesterday and will be buying again.. still considering the entry point though…

  • ML

    200 pips stop loss?

    • happypip

      Yep! I figured if NZD/USD can move 134 pips in one direction in one day (like yesterday), 200 pips should be safe enough. The 0.7500 area is also just below the trend line that I’m trading. You think it’s too far? :)

      • ML

        Yes, I think 200 pips stop loss is too much and does not look like trading at all. 

        • happypip

          Hopefully I won’t need the 200-pip stop loss. Let’s see if NZD can move up by at least 100 pips so I can move my stop to BE. I’ll also watch the pair closely later in case Bernanke doesn’t hint at a QE3. Maybe I’ll tighten my stop then :)

  • antiguilty

    you are referring to the 1-day graph??

    • happypip

      Hi! Yep, I’m using the daily chart. Are you looking at any specific NZD/USD level? :)

      • Kioniboy84

         i dont know what chart u are looking at but my chart doesnt look like that, there is no trend line from august last year 2011

        • happypip

          Oops, my bad. Try August 2010. Already made the change in my post. Thanks for calling it out! :)