I’ve been focusing mostly on technicals in my recent forex trade setups, but I think it’s about time I take something based on fundamentals. What do you think of this EUR/NZD triangle breakout?
I’ve been watching this EUR/NZD ascending triangle for quite some time, waiting for a chance to short at the top or on a downside break ever since ECB Governor Draghi mentioned that additional stimulus is possible. The recently released euro zone flash CPI report for September provided a strong catalyst for a breakdown, as the headline reading printed a 0.1% decline and put the region in deflation.
Meanwhile, the Kiwi might be in for more upside since New Zealand’s dairy industry appears to have bottomed out. The last few GDT auctions have yielded decent gains in milk prices, following reports that Russia ended its ban on the country’s dairy exports. Of course concerns about the slowdown in China are still weighing on comdolls and higher-yielding currencies in general, but the freshly released final PMI readings seem to suggest that the situation ain’t so bad.
I’m still keeping my fingers crossed that this forex pair would pull up to test the broken triangle support at some point before resuming its selloff. I’m considering a potential short position at the 1.7550-1.7600 levels and I’ll be aiming for a 700-pip profit target, which is roughly the same height as the triangle formation. Care to share your thoughts on this?
Cheers,
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