Technical Play on NZD/USD – Second PT Hit!

Trade Closed: 2012-03-27 7:32

My winning streak survives another day!

Thanks to advice from my friends on Facebook and Twitter, I decided to exercise a bit more patience and just wait for NZD/USD to hit my target instead of taking profits early as I had first planned. Thankfully, the decision worked in my favor this time. Forget Team Gale or Team Peeta, I’m on Team Bernanke!

NZD/USD Trade Closed

As it turned out, the comdoll bulls weren’t done with their shopping just yet as they continued to buy high-yielding currencies at the London session open. Price hit .8250 almost as soon as I posted my update! I was able to exit this trade just in time before that bearish divergence formed on the 1-hour chart. Phew!

Of course, I wouldn’t have been so confident with my decision had I not managed my trade carefully and exercised proper risk management. It helped a lot to my confidence that my stop loss was already above break even.

So, after days of holding on to my trade, here’s how it turned out:
1st position with +53 pips and 2nd position with 153 pips for an average of 103 pips and a total of 0.75% gain. Not too bad for a countertrend trade, don’t you think?

I hope I’ll be able to maintain my winning streak though! I’m still looking for a good setup for my trade this week, so any suggestion would be much appreciated!

Till the next trade!

Trade Update: 2012-03-27 03:57
It looks like the odds were ever in my favor lately as I was able to extend my winning streak with this NZD/USD trade. After hitting my first PT, I decided to protect my profits and move my stop to entry for a risk-free second position.

NZD/USD Trade Update

However, price has already rallied by more than 50 pips from my first PT at .8150 and I’m feeling a wee bit tempted to just grab those profits and run! It looks like the pair is stalling just above the .8200 handle and might reverse just before reaching my ultimate PT, in which case I’ll feel extremely bummed.

Then again, NZD/USD is just 20 pips away from my .8250 target so I probably should exercise a little more patience and wait for it to go all the way, huh?

A good compromise between protecting my profits and waiting patiently for this trade to hit my second PT would be to adjust my stop higher. If I move my stop to my first PT, I’d have at least a 0.5% return in the bag but it’d still be open to make a 0.75% overall win if price hits .8250.

Do you think this is a good idea? As always, I’d appreciate your thoughts on my trading decisions so hit me up!

Trade Update: 2012-03-23 01:27

Thank goodness I was able to mark the previous week low in my Comdoll Trading Kit because that level held like a boss! Okay, maybe I also have to thank a bullish divergence and the .8100 psychological handle for the Kiwi’s resilience against the dollar yesterday, but hey, at least the PWL helped a bit too, right?

NZD/USD Trade Update

Still, just because I’m up by a few pips doesn’t mean that I’m letting go of my guard. Fundamentals are still against the high-yielding comdolls right now, with New Zealand’s disappointing GDP figures also weighing against the Kiwi.

On the technical side, stochastic is already in the overbought region, and the pair looks like it has trouble breaking the 61.8% Fib on the 1-hour chart. Since my original idea was partly based on stochastic anyway, I decided to protect my profits in case the pair goes back down during the London session.

Here’s my plan:

Move stop to BE during the London session. If the pair goes above the Asian session high, move stop back to .8040 and wait for first PT to get hit

What do you think of my plan? Should I wait for the pair to hit my new stop, or should I close my position now? Thanks for your advice!

Trade Idea: 2012-03-22 01:45
It looks like all the technical signals are lining up for a long NZD/USD trade! As Big Pippin pointed out in today’s Daily Chart Art, this pair seems to be moving sideways inside a huge range, with resistance around .8250 and support near .8100. The pair dipped to the bottom of the range after China reported a decline in its HSBC flash manufacturing PMI, but it looks like support will be holding.

NZD/USD Trade Idea

I also spotted a bullish divergence on the 1-hour chart suggesting that the pair’s drop might be overdone. The pair barely touched its previous week low which I noted in my Comdoll Trading Kit, and that level could act as strong support. Besides, NZD/USD has already made a full WATR move of nearly 200 pips so I have a feeling that a midweek reversal could be in the works.

I decided to sit tight before jumping in though, as I waited for a 1-hour candle to close above that long-spiked one to confirm a potential bounce. Once it did, I was able to go long at market (.8097) and set my stop below the .8050 minor psychological level.

I’m setting my sights on the middle of the range for my first target and the top of the range and previous week high for my second target.

I’m a bit worried though that fundamentals aren’t exactly on the Kiwi’s side right now. As I mentioned, China just printed a drop in its PMI, which might be negative for the commodity currencies. Also, New Zealand showed a weaker than expected GDP for the last quarter of 2011, which could also weigh on the Kiwi. This was why I decided to risk only 0.5% of my position on this technical play.

If you’re thinking of taking this trade with me, make sure you practice proper risk management and check out our risk disclosure.

Here are my trade details:

Long NZD/USD at market (.8097), stop loss at .8040, pt1 at .8150, pt2 at .8250

Do you think I’ll be able to bag some pips with this setup? Or do you think it won’t work out? As always, I’d love to hear your thoughts!

@Happy_pip Twitter
Playing with Comdolls Facebook page
Happy Pip Comdoll Corners
MeetPips.com

Happy trading to you all!

Happy time

Other Popular Articles:

What is STA strategy? Gold, Oil, and Comdoll Previews for 2012 Comdoll Trading Kit (March 26-30, 2012) AUD/USD trade

  • papeeeboy

    be careful,, also looks a bit like a bear flag forming

    • happypip

      Oh dear, that did look like a bearish flag. Good thing the previous week low held as strong support and the bullish divergence played out. Thanks for the warning though!

  • Djhoughton

    Did you kow that China has increased the tariff on NZ dairy products.

    • happypip

      Yipes! Thanks for the heads up! 

  • Biskra2005

    hi good morning
    iam very happy to join this site ifind it great thank you for your agree and ifind too great learning is good to understand fine

    Best Regards
    Lahcene