And I’m in! EUR/NZD is showing signs of a correction so I decided to scale in with my short position. You see, I’ve been watching this descending channel for quite some time and I’m feeling bummed out about missing a chance to short on the resistance.
But now that price is pulling back, I hopped in at the 38.2% Fib with a small position while staying ready to short on a higher retracement.
Part of the reason why I decided to short at the market was that stochastic was already moving down from the overbought zone. In addition, I’m seeing a bearish divergence since the price made lower highs and the oscillator had higher highs. If a higher correction is in order, I’ve still got another sell order just below the 1.5400 handles, channel resistance, and 61.8% Fib.I’ve set a wide stop of nearly 500 pips, just a tad larger than the pair’s weekly ATR, to give price enough leeway and give me a chance to cut my losses in case the channel resistance breaks. I’m aiming for the bottom of the channel around the 1.4900 handles for my initial profit target.
Here’s my setup:
Short EUR/NZD at the market (1.5300) for 0.5% risk, short at 1.5375 for another 0.5% risk, stop loss at 1.5775, profit target at 1.4925.
This should give me roughly a 1:1 return-on-risk based on my average entry price if my second short order gets triggered. If price shows stronger bearish momentum, I’m open to aiming for a lower profit target based on key support areas visible on longer-term time frames.
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!
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.