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Since the RBNZ hinted that it’s willing to lower rates further, I’m gonna jump out of this long Kiwi position before it starts tumbling. I hope I don’t regret this!

Long NZD/CAD Trade

In my initial trade idea, I’ve shown how the pair was starting to break past the long-term range resistance around .9500-.9550 after New Zealand printed stronger than expected GDP results earlier this month.

On the flip side, Canada’s growth figures didn’t look too good so I went long at market (.9600) and added on a move higher to .9675.

However, the tide turned for the Kiwi when the RBNZ delivered its monetary policy statement, which indicated that more rate cuts could be needed.

It seems as though RBNZ Governor Wheeler and his fellow policymakers weren’t so impressed by the green shoots in New Zealand’s economy and they’re still very concerned about weak inflation and external risks from emerging economies.

NZD/CAD 4-hour Forex Chart
NZD/CAD 4-hour Forex Chart

Around that time, Canada also had a bunch of top-tier reports lined up so I decided to roll up my stop closer to .9500 before the release of the CPI and retail sales figures. After all, this area would be back inside the long-term range I was watching and also below the rising wedge support visible on the 4-hour chart.

Canada’s inflation and consumer spending figures came in below consensus but the Loonie still managed to put up a good fight against the Kiwi last Friday. Traders seemed hesitant to push the Canadian currency in a strong direction ahead of the OPEC meeting anyway.

In hindsight, that rising wedge was probably more of an ascending channel, with the support right around the .9500 mark. To make the long story short, my adjusted stop loss got hit at .9475 before NZD/CAD bounced right back up from the .9500 area. D’oh!

As you’ve probably guessed, I’m not too happy with how I’ve managed this trade as I panicked when price made a sharp drop. It looks like that was just a pullback to the broken range resistance and longer-term fundamentals/technicals are still keeping this pair supported.

I probably should’ve stuck to my guns with my bigger picture perspective instead of being too fidgety and reacting to short-term moves.

Here’s the damage:

P/L: -162.5 pips / -0.30%

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.