Short NZD/USD: Fib Retracement Setup – Stopped Out

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*.

NZD/USD Trade Stopped Out

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!

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Chips, dips, and happy pips!

Happy time

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.

NZD/USD FIb Retracement Update

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

After trading AUD/USD and USD/CAD for weeks at a time, I think it’s time to give some love for the Kiwi! After all, it did show a 7:1 reward-to-risk trade setup last week.

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.

NZD/USD FIb Retracement Setup

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.

The comdolls enjoyed a nice rally yesterday after Bernanke hinted at the possibility of more QE, and now traders are suggesting that the relief rally will continue for the next few sessions.

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!

@Happy_pip Twitter
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Happy Pip Comdoll Corners

Chips, dips, and pips!

Happy time

  • Digitalgypsy5720

    Good idea!!  I still think the 38.2 fib level will be tough to get through. I also have a 34 EMA that ends just above that same level and it has acted as a pretty strong resistance level.  Let’s see what happens though…
    Im most likely going to join you in this trade 🙂  Let do this!!!

    • happypip

      Cool! Let’s earn some pips this week! 🙂

      • Digitalgypsy5720

        I think after this last 4hour candle closes im getting in.  Unless something unexpected happens then I dont see it going up any further.  If Im wrong…then Im wrong! lol 🙂

        • Digitalgypsy5720

          I stand corrected.  it went up lol!

          • happypip

            Yep it did! Could still reach my entry area around .7700-.7750. Where’s your stop though?

      • Digitalgypsy5720

        Im in now…7656

  • Laurynas Katkus

    I think .7800 is more likely to be a superb Resistance area. As well as it combines with 62 79 fibo, which is a kill zone. If you would look at daily .7800, it acted as S/R more often and more strongly than .7700. So my bet goes on that level.

    • happypip

      Thanks for the input, Laurynas Katkus! I agree with you on the .7800 level, so I think I’ll place my stop above that if I decide to pull the trigger on this trade. Are you trading the Kiwi this week? 🙂

  • Cillian Murphy

    Looks good to me! Heavy selling on the Kiwi recently and who are we to go against the trend?

    • Jonathan Baldie

      If you look at weekly charts, you’ll see that the trend is upwards, massive rising channel since the recession thanks to interest rates.

      • happypip

        Yipes. You have a point…

        • Billyhill1974

          But looking at the chart on daily setting there’s been a nice downtrend running since mid july…

          • Jonathan Baldie

            …which is trapped inside a rising channel. Since your comment the pair raised over 150 pips!

  • clertor

    Hi Happy,
    I like your idea. Also, at the 0.77 zone you have the 55 ema and weekly central pivot that are good resistance points. It looks like we are breaking the 21 ema on the 4 hours which means 55 its probably the next stop.
    I like to check the 15 minute charts for change of trend to the downside (price action) to enter my trades.

    Now, I don’t know what your target is, but putting your stop at 0.78 seems a little too high. I look for more dynamic technicals to set my S/L, and anything above what I mentioned before should be fine.

    If you break 0.77 to let say 0.7720, then you get stop for 20-25 pips and you know that wasn’t the right entry. You can keep waiting for another entry closer to 0.7750 or 0.78, but have your trade go 100 pips against you in my opinion is very difficult from a psychological level.

    Good luck!


    • happypip

      Cool beans! It looks like the technicals are really lining up for a short in that area. Just gotta get a nice strong push from the fundamentals. You have a good point but I’m going for a longer-term swing trade so I wanted to give my trade more breathing room. Plus, it’s NFP week so there could be additional volatility. I could decide to exit early though if the techs and fundies give me a signal to cut my losses short. Let’s see how it goes!

  • Clyder

    Thanks for the tip Happy Pip. It may have pulled the trigger already at 76690. Bearish Div has shown up on 5 minute chart
    for NZD/USD (not sure if that’s considered a reliable signal at that
    level), but stoch also shows oversold on 4 hr(3 pm est)…. but what do I know, I’m still a newbie 🙂

    • Clyder

      I’m wrong too. Haven’t entered trade yet though.

  • nb

    already heading down. but it never went up enough

    • happypip

      It looks like it’s bouncing back up now, could still hit .7700-.7750 entry. Did you keep your orders on?

  • snpfx

    i’m with you on this one. shorting at 0.7770,sl at 0.7840, pt 0.7630, good luck!!!

    • happypip

      Thanks @4ca01987ff0b1cce12465752316f9fe2:disqus ! Good luck to you too! 🙂

  • Elvinkwokca

    yup stuck on the top.. which mean it continue to trend higher.. need to wait for it to break down to start shorting.

    • happypip

      Yeah, my friend said there’s a rising trend line on the 1-hour chart so it might be better to wait for a breakdown like you said.

  • Schnitzel

    I am actually long on NZD/USD, heading for 0.78 since the HLHB system gave me an entry point after a crosover from 10 and 20 EMA.

  • Forex Vendetta

    If this trade works out I’ll give ya the money myself 😉

  • nb

    looks be holding real firm. no sell indicator at present due to strength in stockmarkets. can change in a whim as though weekly is in uptrend, these things are in near term downtrend.