Nope, not this time! The channel support on AUD/NZD seemed to give way during its latest test while EUR/JPY isn’t showing any signs of a bounce so far. If you’re wondering what I’m talking about, make sure you check out my initial trade ideas first!
I planned on catching a bounce off the retest of the broken channel visible on EUR/JPY’s 4-hour time frame, but it looks like euro bulls are still sleeping. Price is even starting to break below the bottom WATR and 61.8% Fib, which suggests that the area of interest might not be strong enough to hold as support just yet.
Besides, the decision to delay the healthcare vote by the House of Representatives just boosts the yen’s safe-haven and anti-dollar appeal since the news casts doubts on the Trump administration’s ability to push their agenda through Congress. Some say that the vote could simply be postponed to today, but this probably won’t be enough to shore up market risk appetite in the near term.
Because of that, I’ve decided to take out my open orders to go long and catch some bullish momentum. Thank goodness I decided to take the prudent route and refrained from jumping in at market!
As for my other channel play on AUD/NZD, I’ve also decided to get out of the trade since the latest RBNZ decision didn’t support my fundamental bias. I thought that they would sound a little more downbeat this time around due to lower than expected Q4 GDP and weak trade activity, but policymakers brushed these setbacks aside as temporary factors.
To top it off, the selloff on AUD was a little too strong after reports indicated that iron ore prices fell sharply. The Aussie seems to be breaking off its positive correlation to gold these days, as risk aversion has dampened demand for the higher-yielding currency while boosting the precious metal.
With that, I decided to get out as soon as price started edging below the channel support. I was able to escape with a 35-pip dent on my account for a teensy 0.01% loss. As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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