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I may have been looking at the weekly chart when I spotted this EUR/NZD reversal pattern, but I also saw a nice short-term entry opportunity that I didn’t want to miss!

Long EUR/NZD Idea

As some of y’all pointed out in my initial trade idea, there’s also a short-term uptrend going on and the support area visible on the 1-hour chart might be enough to keep losses in check.

You see, I had been hoping to catch a larger dip to the rising trend line on the 4-hour chart around the 1.7500 mark, but it seems that bulls are just way too eager to push the pair up.

With that, I hopped in at market when I saw the steeper trend line holding around the 1.7700 mark and just set my stop below the longer-term support. This would still be wider than the pair’s weekly average range to give the trade enough breathing room.

EUR/NZD 4-hour Forex Chart
EUR/NZD 4-hour Forex Chart

However, I only entered half my usual position size on this momentum entry since there might still be room for volatility during the ECB decision this week. No actual changes to monetary policy or their official statement are eyed, but policymakers might have some contagion concerns to raise.

If ECB head Draghi winds up reassuring market watchers that the region’s financial situation is stable enough to weather any headwinds from emerging markets, the shared currency could stage another strong rally. Hopefully I can still be able to add to my position by then!

On the flip side, I’m keeping a bearish Kiwi bias mainly on the RBNZ’s less hawkish bias and the sensitivity of the commodity currency to risk-off flows, particularly those stemming from trade troubles.

Here’s what I have:

Long EUR/NZD at 1.7775, stop loss at 1.7475, initial profit target at 1.8475.

Since I only risked a small amount on this one, I’m still open to the idea of adding on a break of the 1.8000 handle or on a correction to the 1.7600 area. I’m also flexible on my target since the double bottom is around 3,000 pips tall, but I’d have to make adjustments depending on the fundamental picture.

What do you guys think?

Happy

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