Partner Center Find a Broker

Why, thank you, RBNZ! I got the confirmation I needed to hop in this long GBP/NZD play after a bit of momentum on the triangle bounce.

Long GBP/NZD Trade

After the BOE statement and a few resurfacing Brexit jitters took this pair down to the very bottom of the long-term symmetrical triangle, I had second thoughts about hopping in right away.

That was because the RBNZ announcement was coming up and I wasn’t sure if they’d finally switch to a less downbeat tone or if they’d simply maintain their earlier bias. As it turned out, RBNZ head Orr and his peers even turned up the dovish bias a notch!

To top it off, the higher-yielding commodity currency was also reeling from another set of tariffs to be imposed by China, which would match the latest round of trade measures slapped by the Trump administration. That can’t be good for export-driven economies, right?

GBP/NZD Daily Forex Chart
GBP/NZD Daily Forex Chart

With that, I decided to jump in a long position at market (1.9275) which is a hundred pips above the triangle bounce of 1.9175 I was hoping to catch. Still, I’m looking at a pretty decent 1:1 potential return-on-risk as I set my stop below the 1.9000 handle and will be aiming for the triangle top and latest highs near 1.9600.

Stochastic is starting to pull up from the oversold area also, giving me more confidence to stay in this swing long position. Even though this does have negative carry, I’m keeping my fingers crossed that the forex gains could outweigh those.

I do have to keep an eye out for the next set of Brexit discussions set to take place next month, as another round of drama could trigger a break of the triangle bottom. For now, I’ll try to cash in on this bearish Kiwi momentum since the latest move hasn’t been as priced in compared to the pound’s woes.

What do you guys think?

Happy

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.