Now that the RBNZ seemed less upbeat in their latest announcement, I’m looking at another potential short Kiwi play with this long-term NZD/CHF range.
Short NZD/CHF Idea
I already had a plan to short the Kiwi through EUR/NZD, but I wasn’t able to catch the pullback I wanted so I’m looking at this breakdown play instead.
Price is already testing the bottom of the range (which also looks like a descending triangle if you scroll back further) on the daily time frame, and might be due for a move lower. I’m looking to hop in on a break below the .6750 minor psychological level with a stop past the .6850 area of interest.
I’m Kiwi bearish because of persistent trade war jitters weighing on risk appetite, on top of the downbeat bias shared by the RBNZ this week. In their rate statement, policymakers highlighted how below-target inflation could use more help from accommodative policy and how GDP and government spending have been weaker than anticipated.
In contrast, the franc has been raking in safe-haven flows these days while traders show some reluctance in going for the U.S. dollar. Even though the Trump administration may be tempering its tone in dealing with China, it’s still at odds with other trade allies like the EU or Canada. This could continue to keep a lid on business investment and U.S. growth prospects.
Besides, I’m also seeing a bit of head and shoulders on NZD/CHF since mid-March, and price has already broken below the neckline to confirm that a selloff is brewing.
I’m aiming for roughly the same height as the range (300 pips) for my profit target, which should give me close to 2:1 return-on-risk with my 150-pip stop. Think this has room to head further down?
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