Trade the New Zealand GDP with me! – Closed Early

Closed Early: 2011-03-24 3:47

It looks like New Zealand technically dodged a recession after all! Yay for New Zealand, boo for my trade!

NZD/USD after GDP

According to a report I read while I was eating my favorite comfort food (Hint: It starts with “ice” and rhymes with “Teenage Dream”), stronger-than-expected exports and construction activity in New Zealand helped improve its economy for the fourth quarter of 2010. The data logged in a 0.2% growth, which is much better than the third quarter’s 0.2% contraction. Traders still have to be careful though, since the report hasn’t factored in the Christchurch earthquake last February.

As I mentioned in my plan, I manually closed the trade as soon as I saw the report. After all, it looked like the pair was ready to break that .7450 resistance that I pointed out yesterday. As a result, my account took a 0.3% hit and I lost 30 pips.

*sigh*

I guess it’s time to move on to another trade! I’m determined to end the month in the green, so I’ll keep on looking for good comdoll setups that could give me pips! Do you have any comdoll trade idea that you’d like to share? Hit me up on the comment box below or give me a shoutout on Twitter!

Trade Idea: 2011-03-23 10:12

With New Zealand’s fourth quarter GDP on today’s deck, the big question is: Will they sink back into a recession or not? As our resident economic hotshot pointed out weeks ago, New Zealand is on the brink of a double-dip recession mostly because of the huge damage that the recent quakes left on its economy.

Growth already fell by 0.2% in the previous quarter and that’s without the effect of the Christchurch quake yet! Another quarter of negative growth could force the RBNZ to slash rates once more, and we all know how the Kiwi fell by more than 300 pips against the Greenback days after their latest rate cut.

Also, New Zealand’s current account balance for the last quarter of 2010 came in much weaker than expected. It posted a 3.52 billion NZD deficit, way below the projected 2.13 billion NZD shortfall. Could this be an indication that the upcoming fourth quarter GDP would also disappoint?

On the charts it seems that NZD/USD is consolidating prior to the actual release, so I’m waiting to either short at the top of the range or at the break of the bottom. On the 4-hour time frame I saw a nice support-turned-resistance area around .7450, which is right around the previous day high. I also spotted a bearish divergence in that timeframe as the oscillator made higher highs while the price made lower highs. Lastly, Stochastic already crossed and is starting to move down from the overbought area, which means that it’s time for the Kiwi bears to pounce!

NZD/USD resistance

But, as always, I’ll try to be a little more patient instead of pulling the trigger right away. I placed a short order at .7425, which is the previous week high and also today’s Asian session high. In case the price doesn’t reach that level and get my trade triggered prior to the release, I also have another short order at .7390. That should get triggered if New Zealand’s GDP comes in much worse than consensus and confirms that they really double-dipped. Of course these two orders will be OCO or “one cancels other“, which means that if one gets triggered, the other one is automatically cancelled.

I have my eye set on the .7125 level just above last week’s low as my ultimate profit target, and I plan to add to my position every 100 pips if the GDP figure is deep in the red. As usual, I’ll be using a trailing stop to protect my winnings. Although I really wanted to go out and watch Justin Bieber’s “Never Say Never” tonight, I’ll be ditching my movie plans with my home girls in order to keep a close eye on the GDP release tonight. It looks like there’s gonna be one less lonely girl in the cinemas tonight!

Anyway, here’s my battle plan to trade the New Zealand GDP report:

A. Short at .7425, stop loss at .7525, pt at .7125 and add 0.5% to my position every 100 pips. I will trail my stop and risk 1% on my initial position.

B. Short at .7390, stop loss at .7490, pt at .7125 and add 0.5% to my position every 100 pips. I will also trail my stop and risk 1% on my initial position.

Wish me luck on this one folks! I badly want a win right now and I’m hoping that trading the news would do the trick. What do you think of this trade? Vote on the box below or give me a holler on my Twitter account!

  • foricks

    Ouch! I missed the news and am hanging on to my .7525 stop by my teeth. The negative divergence is still looming large. I also would expect some week end retracement may push us back in the right direction.

  • foricks

    Ouch! I missed the news and am hanging on to my .7525 stop by my teeth. The negative divergence is still looming large. I also would expect some week end retracement may push us back in the right direction.

  • happypip

    Yeah, 0.7500 really looks like the line in the sand so let’s see if that resistance level holds. We could see some profit-taking at the end of this week so there’s still hope that this pair could dip. Problem is, I don’t think it’s fall that low since NZ was able to dodge a recession. Good luck on your trade though!

  • happypip

    Yeah, 0.7500 really looks like the line in the sand so let’s see if that resistance level holds. We could see some profit-taking at the end of this week so there’s still hope that this pair could dip. Problem is, I don’t think it’s fall that low since NZ was able to dodge a recession. Good luck on your trade though!

  • foricks

    Bang! Dang…I’m out. On to the next trade. The comms are en fuego this week. With Q1 ending next week, gold and silver will probably still be in major flux. Will look for the opportunities then. I just hate being on the wrong side of a rally.

    Thanks for the posts, Doll. I just drowned my sorrows in a sleeve of Thin Mint girlscout cookies!

  • foricks

    Bang! Dang…I’m out. On to the next trade. The comms are en fuego this week. With Q1 ending next week, gold and silver will probably still be in major flux. Will look for the opportunities then. I just hate being on the wrong side of a rally.

    Thanks for the posts, Doll. I just drowned my sorrows in a sleeve of Thin Mint girlscout cookies!