I didn’t get the pullback I was hoping for but I still believe AUD/NZD has short potential, and the consolidation break could pull in more sellers. Time to adjust my entry.
AUD/NZD Consolidation Breakdown?
Since coming out with my idea to short AUD/NZD on a retracement to the Fibs on Tuesday, the Reserve Bank of New Zealand came out with their latest monetary policy statement. And based on my main man Forex Gump’s analysis of the statement and the follow up price action, it looks like RBNZ took a softer tone on Kiwi strength and played down slower growth for Q1 GDP.
With central bank sentiment and the market’s reaction telling me Kiwi strength is likely here to stay, I’m staying bullish on the Kiwi as well. But of course, I’ll have to adjust my entry, and with the pair now playing out the alternative price action I pointed out in my last post, I think it’s time to hop in at market with my usual one weekly ATR stop for a nibble trade. Here’s what I’m doing:
Short half position AUD/NZD at market (1.0378), max stop loss at 1.0543, max target at 1.000 for a max 2.3:1 return-on-risk potential.
I’ll be risking only 0.5% of my account on this position and I may potentially try to maximize my gain depending on what the market stories are if 1.0000 is tested.
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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