I may have missed my short NZD/USD trade but I’m not giving up on my bearish Kiwi bias! Here’s where I wanna enter on EUR/NZD.
Long EUR/NZD Idea
The pair has been trending above an ascending trend line connecting the lows since the middle of this year. After that dip earlier this month, EUR/NZD zoomed sharply higher and broke past the 1.6600-1.6700 resistance when NZF announced its decision to back Labour.
Price seems to be ready for a correction, and applying the Fibonacci retracement tool on the latest swing low and high shows that the 38.2% to 50% levels are within the area of interest.
The 61.8% Fib is closer to the trend line, but my gut tells me that we’ll just see a shallow correction since stochastic is already closing in on the oversold region.
The euro zone has political troubles of its own, but it looks like the shared currency has retained its focus on improving economic data and ECB tapering expectations. Speaking of which, the central bank is scheduled to announce its monetary policy statement this week and head honcho Draghi previously stated that a decision on the fate of their asset purchase program could be made this month.
Because of this event risk, I refrained from setting any actual entry orders since I plan on waiting for what Draghi has to say. I’ll also be watching price action closely during the event to gauge if a larger pullback is underway or if I should try to join the rally at market.
I’m gonna stay on the lookout for reversal candles around the 1.6700 area of interest and probably set my stop below the 61.8% Fib and trend line. As for my target, I plan on aiming for new highs past the 1.7000 handle but I’ll adjust my stop to entry once price tests the swing high.
What do you guys think?
See also: Q3 2017 Trading Performance Review
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