I haven’t been feeling too confident about my recent Loonie trade ideas and since my trading buddies would say “When in doubt, stay out!”, I just decided to look for better setups. Here’s what I’m looking at on EUR/NZD:
Support turned resistance at the 1.6200 area seems to have held, although the pair is still waiting for more downside momentum. As Big Pippin showed in today’s Chart Art, EUR/NZD has formed a descending triangle pattern on its 4-hour forex chart and may be due for more losses if it breaks below 1.6000.
Fundamentally speaking, a short setup does make sense since the euro zone is in a much weaker economic state compared to New Zealand. The upcoming German and French manufacturing and services PMI releases could see another round of declines, which might serve as a catalyst for a selloff back to the previous lows around the 1.5400 levels.
As for New Zealand, the quarterly CPI and the trade balance releases might confirm whether or not the economy has seen some improvements. Quarterly inflation is expected to have picked up from 0.3% to 0.5% in Q3 while the trade deficit is projected to widen from 472 million NZD to 620 million NZD. Apart from that, any changes in forex risk sentiment might also be a major driver for Kiwi movement.
So for now, I’m sitting on my hands and waiting patiently for a strong candle close below the 1.6000 major psychological support before shorting. I’ll set a wide stop of at least 200 pips and I’ll be aiming for the recent lows at the 1.5450 area.
What do you guys think of my trade idea?
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