Time to get my Q2 forex trading mojo on and I’d like to start with a short setup on AUD/NZD. Is the latest pullback a great time to jump in the downtrend?
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Earlier in the Tuesday Asia session, the Aussie dollar rallied across the board after the Reserve Bank of Australia announced it held the cash rate unchanged at 2.25%. There was a good number of economists and traders predicting a rate cut from the RBA, so when we didn’t get the cut, traders quickly unloaded AUD shorts. According to Forexgump’s review of the RBA event, it’s still likely the RBA will eventually cut to help bring sustainable growth to Australia, so I think this pop higher is an opportunity to hop into an Aussie short. And what better opportunity is a pair that I’ve already done well in this year: AUD/NZD.
Here’s my chance to add onto my gains from my winning AUD/NZD trade in Q1, and it looks like a great trade as the downtrend still looks intact, especially with recent data in New Zealand making an argument that the RBNZ won’t be cutting interest rates anytime soon. With this bounce higher to potential resistance at the falling trendline and previous broken minor support, I think sellers may take a nibbler and so will I. Here’s what I am doing:
Short half position at market (1.0160), stop at 1.0370, profit target at 1.0000
Short half position at 1.0250, stop at 1.0370, profit target at 1.0000
I’m only risking 1.00% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1.37:1 if both positions are triggered. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!
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