With the RBNZ decision coming up this week, I’m on the lookout for Kiwi setups that I can trade. Do you think it’s a good idea to short this one?
Short NZD/CHF Idea
On its daily time frame, NZD/CHF is forming a descending channel with its lower highs and lower lows. The pair is still testing the resistance, which is around an area of interest that appears to be holding up well.
I’m also seeing a potential double top formation at this channel resistance, but it may be a bit early to tell. If completed, the neckline would be located around the mid-channel area of interest, and a break below this level could pave the way for a move to the very bottom of the channel.
Stochastic is heading south, so NZD/CHF might follow suit while bears have the upper hand. This could all boil down to the RBNZ decision as cautious remarks might be in the cards.See, their buddies over at the RBA are giving hints that they’re open to cutting interest rates again on account of trade tensions dampening their outlook. New Zealand’s economy might be on the same boat, putting the RBNZ waaay behind the pack when it comes to tightening.
I’m hesitant to just jump in at market, though, since the franc just had a bit of a “flash crash” to start the week. Many blame this on the low liquidity conditions due to the Japanese bank holiday on Monday, but the effect on NZD/CHF doesn’t seem to be as pronounced as other franc pairs.
Now this is where I could use some help. As you can probably tell, I’m short biased on this pair but I can’t seem to figure out where to set my entry area.
Waiting for a test of the neckline or an actual breakdown could be too late while shorting at market ahead of a top-tier event gives me butterflies in my tummy. Should I wait for a test of the channel top again? Or try to trade the news?
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.