Playing the Kiwi Ranges… Again! – End of My Winning Streak

Trade Idea: 2012-04-12 5:45

Aaaaand I’ve broken my winning streak! Too bad!

Hmm, it seems that I have started the second quarter on the wrong foot. China’s local-currency-denominated loans clocked in at a whopping 1.01 trillion yuan in March, which is 21% higher than investors’ consensus.

Not only that, the country’s money supply also showed a 13.4% growth from a year earlier against expectations of only a 13% rise. The positive figures suggested that the Chinese economy won’t be experiencing a “hard landing” after all, so traders turned to high-yielding currencies like the comdolls. Of course, it didn’t help my trade that Italy also experienced a better-than-expected bond auction as demand for its 3-year bonds exceeded supply by 1.43 times.

NZD/USD Trade Closed

NZD/USD not only ended up blasting above the .8250 range resistance that we pointed out, but it also took out my stop loss at the .8300 major psychological handle before a downside surprise to the Chinese GDP on Friday dragged the comdoll back inside the range.

Here’s the damage:

P/L: -50 pips / -0.5%

Losing a trade isn’t the best way to start a quarter, but I remember that it’s what also happened to me in Q1 2012 when I lost my AUD/USD trade before I went on to have my winning streak. There’s hope for me still!

Thanks for supporting me on this trade, guys. Hope you all have fantastic trades this week!

Trade Idea: 2012-04-12 5:45

It looks like NZD/USD is stuck inside a small range on the 1-hour chart and a wider range on the 4-hour time frame. As you can see from the chart below, the pair is climbing close to the top of both ranges at the .8250 minor psychological level.

NZD/USD Trade Idea

The lack of hard-hitting reports from New Zealand for the remainder of the week could keep NZD/USD well within this range. However, I gotta keep my eyes glued to the upcoming U.S. data, namely the trade balance and CPI figures due today and tomorrow respectively.

I also have to be on my toes during the Chinese quarterly GDP release at 3:00 am GMT Friday in case stronger than expected results give higher-yielding currencies a reason to carry on with their rallies. Analysts expect an 8.4% reading for Q1 2012, slightly weaker than the 8.9% growth seen for the last quarter of 2011. Data from China has been impressive lately, but Forex Gump warned that there are still plenty of underlying weaknesses in the Chinese economy and these could be reflected in the GDP report.

If this trade gets triggered and the fundamental reasons tell me to hold on, I’ll be aiming for the bottom of the smaller range at .8200 for my first PT. Once price hits that level, I’ll move my stop to entry then aim for the support of the larger range, which is near PWL, for my second PT. I’ll set a tight stop above WATR for this one so that I’ll be out of the trade once the top of the range breaks.

Here are the details:

Short NZD/USD at .8250, PT1 at .8200, PT2 at .8100, stop loss at .8300.

That should give me a 1:1 potential reward-to-risk ratio for my first position and an additional 3:1 gain on my second position. I’ll be risking 0.5% of my account on this trade and if you plan to jump in with me, you should check out our risk disclosure first.

Do you think I could start the second quarter of this year with a winning trade? Let me know what you think!

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Good luck in your trades this week, buddies!

Happy time

Other Popular Articles:

What is STA strategy? Comdoll Trading Kit (April 9-13, 2012) USD/CAD trade Q1 2012 in Refview

19 comments

  1. Shine Huang

    Looking a bit further behind the range, I had a triangle drawn on the 4hr chart (I could be doing it wrong)  and it looks like it just broke out of the triangle to the upside.  Love your tips as always Happy :)  We’ll get em next time :)

    Reply
    • Happy Piphappypip Post author

      Thanks, Shine! I just saw the triangle breakout that you pointed out. Oh well, it was a valid setup at the time. You’re right, we’ll get ‘em next time :)

      Reply
    • Happy Piphappypip Post author

      Aww, thanks for the support, Necrobadger! Don’t worry, we’ll spot another winning setup soon. Hope your trades are doing well! :)

      Reply
    • Happy Piphappypip Post author

      Yep, I also made a few pips from this range a few weeks back. Too bad it didn’t work this time. Did you also short NZD this week? :)

      Reply
      • andy1234

        Yes, opened at 0.87 and got out at 0.82 with quite a wide stop. I don’t usually like having open positions at the weekend and the breakout made me a bit nervous.

        Nevertheless, with risk-off being back and the unconvincing breakout I might jump back in on Monday.

        Reply
  2. MrPippy

    You never put your stop directly on the figure point….8300, it always needs to be above that.  Even is .8300 was price will usually break through a bit before rejecting.

    Reply
    • pipVader

      I agree, although you’re a bit absolute on your comment MrPippy.  It is wise to allow about 20-30 pips room near round handles to allow for stop flushing, but given that NZD/USD hasn’t tested 0.8300 for some time, and that its recent range has been tucked nicely within 0.8300, I don’t think Happy was wrong to have placed her stop at 0.8300. Things always seem more obvious in hindsight.

      Reply
    • Happy Piphappypip Post author

      Yeah, I probably should’ve given it a little more leeway. I guess I was preoccupied with my R:R on my first PT that I ended up with a very tight stop. I’ll keep your advice in mind!

      Reply
  3. pipVader

    You were unlucky with this one Happy, the bulls just had enough muscle to charge that 0.8310 62% retracement of 29/02-10/04 decline. Better luck with the next one!

    Reply
  4. ML

    Well, the trend of your trade NZDUSD in fact still goes in your favour. Just that the stop loss is not placed correctly. I think you still give a good recommended trade. 

    Reply
    • Happy Piphappypip Post author

      Good point. I could’ve widened my stop a bit (75 pips, maybe?) and I’d still be in this trade and profiting right now! I’ll keep that in mind. Thanks for the nice feedback :)

      Reply

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