And I’m in! A couple of positive updates from New Zealand brought this pair down to my entry point, but I still think the uptrend would resume soon.
Long EUR/NZD Idea
I gotta admit, I’m feeling a bit nervous for this position ahead of New Zealand’s parliamentary elections at the end of the week as polls are hinting at a National Party majority. Analysts are dubbing this a bullish scenario for the Kiwi, which might take EUR/NZD all the way down to the channel bottom.
Fortunately, I’ve got a wide stop for this position below the lowest Fib and the 1.5900 major psychological level. I’m watching the daily time frame, after all, and I’ve also got a wide target right at the top of the channel.
I’m keeping a long-term bullish euro bias because of persistent ECB tapering expectations, even after policymakers have been trying to jawbone the currency lately. Draghi did hint that they might come up with a decision by October and forex junkies seem to be anticipating the actual implementation to come through by December.Jawboning is also something that the Kiwi has been dealing with during RBNZ announcements, with Governor Wheeler strengthening his tone on potential currency intervention. However, he is also scheduled to step down from his post soon, which could bring a bit of uncertainty and quite possibly a tighter central bank mandate that would keep a lid on rate hikes for much longer.
In hindsight, I can’t help but wonder if I should’ve been more patient and waited for an actual test of the channel support before going long, thereby giving me a potentially higher R:R or a larger breathing room for my trade. For now, I’ll sit tight and watch the GDP release, along with the election results, closely in order to gauge if I should keep this one open or not.
Here’s what I have:
Long EUR/NZD at 1.6275, stop loss at 1.5875, profit target at 1.6675 for a potential 1:1 return-on-risk. What do you guys think?
See also: Q2 2017 Trading Performance Review
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