Closed All Positions: 2011-11-24 2:19
Woah! I wasn’t expecting that weekend gap up from NZD/USD but it’s a good thing I moved my stop to breakeven on my remaining position. I’m also patting myself on the back for not being extremely ambitious with my first profit target. Because of that, I was able to lock in 50 pips or a 0.35% gain from this trade.
In retrospect, I probably should’ve exited my entire position at .7400 knowing that the markets could get crazy once U.S. traders come back from their Thanksgiving holidays. Then again, that was a tough call since risk aversion was really strong at that time. I was even thinking that NZD/USD would gap DOWN over the weekend!
Here’s how my trade ended up:
P/L: +50 pips / +0.35%
Not bad, eh? Do you think I could’ve played this better? I’d love to hear from you and you know where I’m at!
Let’s score more pips this week!
First PT Hit: 2011-11-24 2:19
Yesterday while I was helping out my sister prepare her gazillion side dishes, I was keeping one eye on my NZD/USD trade. You see, I was expecting that more bearish news would come out of the euro zone and maybe take its toll on the comdolls.
Lo and behold, Fitch decided to downgrade Portugal’s credit rating by a notch to BB+! Not only that, I heard that Angela Merkel also stood firm in her lack of support for euro zone bonds or even more ECB involvement. The news inspired some selloff for a while, but the hype soon died down as the lack of trading volume discouraged many investors to commit to a position.
In any case, the short-term selloff in high-yielding currencies was enough for NZD/USD to reach my first 50-pip profit target at .7400. Now I just have to worry about my second position, which already has its stop loss at break even.
Today no major reports are due from the U.S. so I just have to focus on the euro zone debt drama and the Parliamentary elections in New Zealand. If I start to see good news from the euro region or if New Zealand’s elections went better than analysts were predicting, then I would probably take profits early.
Here’s what I have for now:
Should I tighten my stop, add another position, or take profits early? As always, tips are very much welcome. You know where to reach me!
Trading slow, with the flow, and hopefully hitting PTs two in a row!
Trade Idea: 2011-11-24 5:59
As you can see on the chart below, NZD/USD has been stuck inside a falling channel on its way down from .7700 to .7400. Right now, it looks like the pair is giving me a chance to hop in the downtrend because it looks ready to test the top of the channel again. Oh, and have I mentioned that it lines up with the 50% Fibonacci retracement level and the .7450 minor psychological mark?
But wait, there’s more! I’m also seeing a nice bearish divergence on the 1-hour time frame as the pair made lower highs while stochastic made higher highs. I better take a quick peek at the 9 Rules for Trading Divergences before entering my orders!
As for the fundamentals, it seems like the risk off environment is here to stay unless we see any positive updates from the euro zone. You see, economic reports have taken the backseat for a while as most market participants zoned in on the growing possibility of debt contagion. They didn’t even react to New Zealand’s better than expected trade balance, which showed that their deficit narrowed from 789 million NZD to 282 million NZD in October.
One thing that I do have to take note of is the prospect of higher volatility during the Thanksgiving holidays. With that, I should give my trade enough breathing room to withstand those potential wild moves. Check out my trade details:
I will risk 0.75% of my account on this trade and I plan to move my stop to breakeven once my first target gets hit. I’ll keep the rest of my trade open and adjust my stop every 50 pips if NZD/USD breaks below the channel.
What do y’all think of my trade idea? Do you think this short setup will score me enough profits to go on a shopping spree on Black Friday? Holler at me!
Happy Thanksgiving, everyone!