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My gut was telling me that this pair would make a downside triangle break last week, and break it did! I haven’t jumped in yet, but here’s what I plan to do.

Short NZD/CHF Trade

I was watching a small ascending triangle on the 1-hour chart of this pair, still deciding whether to enter on a break of support or a test of the resistance. I figured I’d sit on my hands then while waiting for the SNB decision and NZD GDP release.

I wasn’t about to jump in ahead of this week’s RBNZ decision either, but I had a feeling that it would lead to a strong bearish reaction from the Kiwi. After all, the RBNZ has trailed behind the pack in shifting to a more optimistic stance, so they were likely to be among the first to revert to a dovish tone.

Now I wish I set a short order, even for just a tiny position, below the short-term triangle support!

NZD/CHF Daily Forex Chart
NZD/CHF Daily Forex Chart

The RBNZ did turn dovish in its latest announcement, hinting that a rate cut might even be in the works for May or sometime this year. At the same time, a bit of risk aversion is still in play as trade concerns are lingering and Brexit developments are adding uncertainties.

With that, I think this pair could have enough bearish momentum to take it down to the next support level, probably around the mid-channel area of interest at the .6400 handle. Stochastic is still heading lower to confirm that sellers have the upper hand for now.

I’m hoping to catch a quick pullback to the .6800 area for a slightly better short entry, but I’m also open to jumping in on a break of the current consolidation around .6725. I’ll have my stop above the .6900 triangle top and set my initial target at .6425.

What do you guys think?


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