On Tuesday, I shared an idea to short a major range resistance area on AUD/NZD. Today, I’m adjusting my entry now that I’m past the major risk event of the Reserve Bank of New Zealand policy meeting.
In case you missed the original idea and its fundamental/technical arguments to short on Tuesday, check it out here.
Overall, there isn’t much that’s changed in my bias after the RBNZ monetary policy meeting, especially with the RBNZ feeling upbeat on New Zealand’s economic outlook, even if there may be a slow down in the near term. They also did mention that this could lead to a faster path to hiking, and that they’re happy with the current levels of the New Zealand dollar, noting it is closer to sustainable levels that previous. For a full recap of the RBNZ monetary policy event, check out Forex Gump’s coverage today.
After the event AUD/NZD spiked lower, pushing the market far away from my pre-event entry point, and with sentiment looking good for the Kiwi at the moment, I’d like to still go short the pair, even at a lower price. So I zoomed into the one hour chart to see if I can find a better entry setup.
One the one hour chart above of AUD/NZD, we can see the pair has been in a downward channel and it’s bouncing higher after hitting the bottom of the channel post-RBNZ event. The market is very close to reaching the top of the falling channel, as well as testing the broken minor support area around 1.1050. I’ll take a shot there with my usual one weekly ATR stop and still targeting the bottom of the major range. Here’s what I’m gonna do:
Cancel short orders at 1.1200
Short half position AUD/NZD at 1.1050, max stop loss at 1.1250, max target at 1.0400
Again, I’ll be risking only 0.5% of my account on this position and as usual, I’ll look to make adjustments at around 1.1000 if I’m triggered, which would likely to be adding to my position/roll down my stop to max out the trade if the momentum is still strong and the fundies support further moves lower. Stay tuned!
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