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Decided to cut this one short after the Kiwi didn’t quite act the way I thought after a weaker-than-expected New Zealand CPI report.

NZD/JPY Range Reversal Lower?

NZD/JPY 4-Hour
NZD/JPY 4-Hour

Originally, I decided to short at a major resistance area on NZD/JPY, after New Zealand released its quarterly CPI data at a miss (1.7% Q2 actual vs. 1.9% Q2 2016).  I thought this could be the catalyst to spark profit taking after a strong move higher over the past couple of months, and as Commitment of Traders data showed extreme positioning in both currency futures.

Well, that breakdown of 82.00 actually didn’t last long, and after a week of maintaining the consolidation area between roughly 82.25 to 83.00, today we saw a break higher as broad risk-on sentiment continues to drive risk assets and high-yielders higher.

So, I decided to go ahead and close my trade manually at 83.49 on today’s consolidation breakout higher and take a small loss:

Total: -159 pips /-0.34% loss on 0.50% risk

Overall, I still think this was a good trade given the weak NZ CPI data and I’m still bearish on the pair given the net extreme positioning in the COT data, but given the strong global risk-on sentiment, I wouldn’t take another short without a heck of a negative catalyst to take broad risk sentiment down.

So, that’s it for now but stay tuned for potential adjustments to my remaining position, EUR/JPY long.  Fortunately, it’s gained enough where I could be locking in some profit soon and possibly even add to the position if global risk sentiment continues to stay on. And as always, good luck and good trading!

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