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Kiwi bears seem to be gaining momentum on downbeat RBNZ expectations and a return in risk aversion. Check out this neat range setup I’m trading!

Short NZD/JPY Trade

The long-term range resistance at the 83.00 major psychological level held once more, putting this pair on track towards falling towards the floor at the 73.00 handle.

I decided to hop in at market on a break of a short-term trend line and the 81.00 mark, knowing that the drop was fueled by a return in risk aversion.

NZD/JPY Daily Forex Chart
NZD/JPY Daily Forex Chart

As Pip Diddy mentioned in his U.S. session recap, shots have been fired between the U.S. and North Korea… figuratively, of course. For now, markets appear jittery about missile strike threats on the U.S. territory of Guam and Trump’s “fire and fury” retaliation.

With that, lower-yielding currencies like the yen are taking advantage of the risk-off flows while the higher-yielding commodity currencies are taking hits. To top it off, RBNZ expectations are also keeping a lid on the Kiwi’s gains as jobs and inflation numbers haven’t been so impressive lately.

Still, I’ve set my stop past the range resistance and 84.00 mark in case price suddenly pops up after the RBNZ decision, giving me enough room to cut losses if needed. I’m setting my sights on the long-term floor as my target but I’ll stand ready to roll my stop down to lock in some gains once price tests the mid-range area of interest around 78.00.

Here’s what I have:

Short NZD/JPY at market (80.55), stop loss at 84.25, profit target at 73.25. I’ve risked 0.5% of my account on this setup for a potential 1.97-to-1 R:R.

 

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