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EUR/NZD made another leg lower as forex traders continue to price in monetary policy easing by the ECB next month.  The pair finally reached the previous swing low, so I thought I’d adjust one more time to lock in further gains and increase my profit potential.

Original Idea: Taking Another Shot at EUR/NZD
First Adjustment: Short EUR/NZD Trade Update
Second Adjustment: EUR/NZD Trade Adjustment

EUR/NZD 4 Hour Forex Chart
EUR/NZD 4 Hour Forex Chart

There doesn’t seem to be an official catalyst for today’s drop just ahead of the London session open, but Bloomberg reported that there were comments from ECB Vice President Vitor Constancio that the central bank is prepared to add further monetary stimulus if needed.

We also saw preliminary European GDP q/q come in below expectations (0.2% vs. 0.4% forecast), which doesn’t help the case to not add stimulus.  It’s still too early to see if traders will factor that into short euro bets, but I decided to adjust one more time as EUR/NZD breaks previous support at 1.5770.  Here’s what I did:

Added another quarter position at 1.5757, adjusted full position stop to 1.5850.

This locks in 200 pips on my first position, my second position is locked in slightly below its breakeven level, and my third position has a potential loss of 93 pips.  This adjustment effectively locks in more profit (+0.33%) and increases my max gain if the market continues to drop.

With the strong momentum, I think the 100 pip stop is far enough to weather any choppiness and keep me in the trade. I’m going pretty aggressive with my additional positions since I started this trade with a pretty small position.

From here on out, it’s just a matter of running the process of trailing my stop and adding to my position to risk less and make more.  There is one more day left in the week, so I may close out a portion (or the whole position) to avoid weekend risk.  Stay tuned!

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