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Since putting on my short position a couple of weeks ago, my fundamental bias & the technical picture has changed enough to close out. Here’s a quick forex trade review.

Trade Idea: GBP/NZD Falling Trendline Retest

GBP/NZD 4-Hour Forex Chart
GBP/NZD 4-Hour Forex Chart

Fundamentally, the United Kingdom has mostly been firing on all cylinders with recent positive economic reads, including expansionary business conditions sentiment, a three year trend lower in unemployment claims, and an accelerated rise in year-over-year inflation reads. Of course, not all is perfect, but if it not were for the Brexit situation, an argument could be made for an interest rate hike from the Bank of England.  In this situation, I don’t want to short the British pound, even against a strong Kiwi with a lot of positive sentiment coming from New Zealand.

Technically, the pair hasn’t really gone anywhere in the last two weeks, trading in between 1.7200 to just below 1.7500, but the picture has changed in that the falling trendline I drew before is now invalidated and we can see a rising triangle forming.  Support seems to be strong around 1.7250 lately, and we could see another attempt at 1.7500.

With both the fundies and technicals changing, I’ve decided to close out the trade manually at 1.7354, fortunately for a tiny gain:

Total: +23 pips / +0.03% on 0.50% risk

With the fundies doing well in the U.K. at the moment, and the likelihood of a Brexit being fully priced in, I think I’ll turn on my radar for potential Sterling long plays. But with the dark cloud of Brexit looming, I’ll keep any British pound trades in my short-term trading portfolio. Stay tuned!

Risk Disclosure
Pipcrawler’s Q4 2016 Blog Trading Performance

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.