This week, I’m switching out my short CAD ideas with this simple NZD/CAD breakout setup, ahead of potentially volatile catalysts for both the Kiwi and the Loonie. Check it!
NZD/CAD Upside Channel Breakout
I’m back on the long Kiwi bias this week after positive quarterly inflation data was released in April from New Zealand, finally hitting the Reserve Bank of New Zealand’s target of between 1 to 3 percent. Combined with the positive sentiment survey data and trend of strong employment growth the past few quarters, buying up some Kiwis makes sense. Combine that with the recent weak Canadian data (retail sales drop 0.6% and weak inflation data), going long NZD/CAD seems like a better than 50/50 shot to play.
And the break of the falling channel and previous swing high around the major psychological level of .9500 seems like a good signal that the bulls are very much in control. So, I look to go long here on the break, but with New Zealand and Canadian employment data coming up, I’m going with a wide stop to whether any volatility both events are likely to bring. My max stop is one full weekly ATR and my max target will be an ambitious one since we should get a burst of volatility soon. Here’s what I’m doing:
Long half position NZD/CAD at market (.9525), max stop loss at .9325, max target at 1.000 for a potential 2.37:1 return-on-risk.
I’ll be risking only 0.5% of my account on this position and I’ll look to re-assess to potentially reduce my risk and maximize my gain if I’m triggered and the market still has strong upward momentum around the previous resistance area around .9600.
Also, I’m closing my orders on my EUR/CAD long idea and EUR/AUD long idea since the market has pretty much run away higher, decreasing the chance I’ll even get triggered. And going long now either pair gives me a much less attractive potential R:R than this NZD/CAD long, so it’s time to close those orders.
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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