Stopped Out: 2011-10-11 2:24
Ever wished that you closed your trade before a major economic report was released? I know I have! At least for this trade anyway.
After pulling the trigger on my NZD/USD Fib retracement setup last Thursday, I kept it open believing that traders would soon be on risk aversion mode, if not on a profit-taking frenzy ahead of the NFP report.
I guess I should’ve listened to the saying “no position is a position” because the NFP surprisingly came in at a much higher figure than expected, which easily boosted NZD/USD all the way to my stop loss. I know that it was a risk that I chose to take, but darn, how I wish the pair had gone the other way. *sigh*.
Oh well, at least the data showed that the U.S. employment scene isn’t as bad as forecasted and I guess I should be happy for that alone. But I have to get ready for this week if I don’t want to miss any more setups like the AUD/USD winner I spotted last week!
Got any trade ideas for this week? I’ll be right here on any of these pages!
Chips, dips, and happy pips!
Trade Update: 2011-10-06: 10:24:23
Ooh, the technical signals are lining up quite nicely for my short NZD/USD trade! Now that the pair reached my entry area, I decided to just go for it.
When I checked the 4-hour chart a few minutes ago, I noticed a neat little doji that formed right on the .7700 handle. Unfortunately I wasn’t able to short right at that level since I was still waiting for news from the BOE and ECB statements.
It turns out that Mervyn King and his men over at the BOE decided to pull the trigger on more asset purchases since the U.K. economy badly needed support. On the other hand, ECB President Trichet announced that the central bank kept rates on hold, but they also released a few measures to boost liquidity.
Around the time the news reports are spreading, Stochastic reached the overbought region on the 4-hour timeframe, signaling that Kiwi bulls were running out of steam. Could this mean that the risk rally is over? Well, we’re about to find out!
Since I decided to wait for a bit of confirmation, I was able to enter the short trade at .7670 and I set my stop 90 pips above that. I’ll still be aiming for the .7500 level, which is near the pair’s recent lows.
Here are the details:
Short NZD/USD at .7670, stop loss at .7760, pt at .7500. I risked 0.5% of my account on this trade.
Do you think I could score another win with this one?
Trade Idea: 2011-10-05: 07:24:23
This time around I’m seeing a possible Fib retracement setup on the 4-hour chart. The pair bounced off the .7500 handle yesterday and it looks like it’s heading up to the .7700 resistance area. If the pair reaches the level, then Stochastic will probably be in the overbought region by then, and complete the bearish divergence signal that I’m watching.
With China enjoying a holiday week and New Zealand not scheduled to release any economic report till next week, I’m betting my best pair of shoes that the Kiwi will spend the rest of the NFP week trading on risk sentiment.
Fundamentally though, nothing has changed in the euro zone. EU leaders are still eons away from agreeing on a solution to the debt crisis, and the U.S. economy is still popping up worse-than-expected economic reports.
In any case, I’ll be watching this trade idea closely. Right now I’m planning to short at the .7700 -.7750 area depending on the Stochastic signal and place my stop above the .7800 psychological level. If the pair drops without hitting my entry target, then I might have to look for another place to enter, or maybe another setup from the other pairs.
What do you think of this trade idea? Can you suggest any tweaks I can make? I’ll be right here on one of these pages!
Chips, dips, and pips!