Guess what? GBP/NZD is now retracing to a better entry area! I really should’ve been more patient with this short forex setup, as price did eventually pull back to the broken support zone. I was so worried about missing the boat that I shorted at market right at the bottom.
Good thing I decided to keep a really wide stop for this one, as I figured that this pair moves more than 200 pips in a day. I’ve risked half my usual position size on my market entry at 1.9700 too so I still have room to add another half around the 2.0000-2.0100 broken support.
Fundamentally speaking, the BOE minutes did turn out to be a bit of a surprise for the pound, as policymakers seemed less dovish than expected. However, the fact that BOE Governor Carney pushed back rate hike expectations recently might still weigh on the currency. As for the Kiwi, remarks from Finance Minister English saying that the currency is already trading around sustainable levels could keep it afloat.
With that, I’m still expecting GBP/NZD to resume its selloff sooner or later. I’ll be watching the 2.0000-2.0100 area closely to see if any confirmation signals or reversal candlesticks form before I add to my short position. What do you think?
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