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Trade Canceled: 2012-05-18 1:50

Ugh, I can’t believe I missed this setup! Yesterday we talked about how NZD/USD might suffer more losses. Unfortunately, the pair didn’t rise enough to hit my entry order.

NZD/USD remained on a tight 50-pip range for most of the day yesterday despite the relatively sharper losses that occurred in European currencies. It found resistance at the .7680 area, which is a few pips below my .7700 short order.

NZD/USD Trade Canceled

Then, just when I was thinking of shorting at a retest of the range‘s resistance, the pair went on its merry way down a couple of hours ago as overall risk aversion was fueled by successive downgrades, mixed U.S. data, and weak Chinese data. NZD/USD broke below its .7630 support and is currently trading around the .7550 area.

Where have I gone wrong on this trade? Was I too picky with my entry point? A couple of my trader friends have pointed out that I could’ve also jumped in the bear party and just placed my stop above the range.

What do you think? How could I have played this trade better? As always, your thoughts are most welcome!

Trade Idea: 2012-05-17 2:17

My, my! It looks like the trends are really strong these days! Since I’m thinking the trend will still be my friend, I’m looking at this potential short on NZD/USD.

There’s a falling trend line on NZD/USD’s 1-hour chart that extends all the way back to the last week of April so I’m hoping to catch the retest of this resistance level. I used my handy-dandy Fibonacci retracement tool to figure out where I should enter, and I noticed that the .7700 major psychological handle is close to the 38.2% and 50% levels.

NZD/USD trend line

However, I did note that Stochastic is still pointing upwards, which means that Kiwi bulls could push this pair further up. Don’t worry, I’ll be waiting for this oscillator to reach the overbought zone and turn down before entering this trade. Once in this trade, I’ll set my stop just above this week’s top WATR and my target at the recent low of .7625.

As for fundamentals and risk sentiment, I do believe that the downbeat outlook for the markets could carry on, at least for the next couple of days. Although Greece already announced that they’d be having their elections next week, market participants seem to be pricing in the possibility of a Grexit later on.

Here’s what I’m planning to do:

Short NZD/USD at .7700, stop loss at .7775, PT at .7625.

I’ll be risking 0.5% of my account on this short-term trade and, if you’re thinking of joining me, make sure you read our risk disclosure first.

I’d love to hear what you think of this setup so don’t be shy to share your thoughts!

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Good luck in your trades this week, buddies!

Happy time

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