Ack, it’s a breakout! Just when I thought the resistance on AUD/NZD’s long-term range would hold, price broke to the upside after the RBA decision. Here’s how my trade turned out.
Contrary to my expectations, the RBA retained its optimistic tone in this week’s monetary policy statement, assessing that the Australian economy continues to improve and that their decision to keep interest rates on hold is “consistent with sustainable growth in the economy and achieving the inflation target over time.”
RBA head Lowe also mentioned that the depreciation of the Aussie since 2013 has helped the economy in its transition from the mining investment boom, but he also warned that a rising currency value could complicate this adjustment. However, this weak form of jawboning failed to draw more Aussie bears to the mix. Soon enough, New Zealand reported a 6.3% fall in dairy prices during its GDT auction, nearly twice as much as the earlier 3.2% slump.
With that, AUD/NZD moved all the way past the long-term range ceiling at 1.0750 and broke past the 1.0800 handle to trigger my stop. Even though a 160-pip stop looks tight on a daily time frame, I just wanted to be immediately out of the trade the moment the range resistance breaks. Think I should switch biases and go for a long position from here?
Anyway, here’s the damage:
P/L: -160 pips / -0.50%
In hindsight, I probably should’ve waited for the event risks to play out instead of hopping in at market, but I couldn’t resist trying to catch that bounce off resistance. Don’t forget to check out our risk disclosure if you’re trading this one, too!
See also: Q4 2016 Trading Performance Review
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.