After a few short weeks of bouncing around the .7000 handle, it looks like the bears are starting to win out the battle. With price invalidating my trade, I decided to limit my max risk by closing out. Here’s a quick review.
I got into this trade thinking that the strong previous support behavior would draw in buyers once again, but it was a no-go as the market went into consolidation mode as soon as my .7000 buy level was hit. It might have been a mix of some positive rhetoric from the recent RBNZ meeting vs. the downtick in New Zealand GDP that kept the pair in a range, or possibly the neutral policy bias of the Swiss National Bank. Whatever the case may be, price action was a snoozer for few weeks, keeping the pair within a range between .6950 – .7050.
This week, we’re seeing a break below that range, possibly on a shift in broad risk sentiment with so many uncertainties around (e.g, ability of Trump to make regulation & tax changes, U.K. political issues, European Presidential elections, etc.). Whatever the case may be, I decided to close the long NZD/CHF position manually during the morning London session at .6910 to limit my max risk:
Total: -90 pips/ -0.34% loss on 0.50% risk
Overall, I probably could have closed for a small profit ahead or tiny loss ahead of the RBNZ monetary policy meeting since I had a feeling the weaker NZ GDP number could spark some concerns. But with the price pretty much still trading around the open, I thought I could close quickly if the rhetoric was bad. The market reaction could have gone either way really because the GDP number might have already been priced in, so I don’t think holding on was necessarily the wrong decision.
Give the broad weakness in Kiwi lately, I’m cautiously bullish on it for now and still bearish on the franc, but if risk-off sentiment continues to grow, this pair could be headed for more downside moves. I’ll be watching, and until my next idea, stay tuned and trade safe!
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