Phew! That was a nail-biter, that one. Although it seemed that the odds were against this trade, look how I managed to escape with only a little scratch!
NZD/USD came within a hairline of my stop at .8125 when the US printed mixed data yesterday. On top of that, it didn’t help my short trade that risk was on after Spanish bond yields dropped and Merkel pledged extra support for the euro.
However, resistance near my stop held and the pair eventually dropped back down. I waited for a bit so that I’d be able to exit ahead of the weekend.
Luckily, the pair dipped back to close my entry and I was able to close with only a 0.14% scratch.
I know that at lot of you were also disappointed that NZD/USD didn’t fall as much as we expected yesterday. Don’t worry, we’ll get ’em pips next time!
Trade Update: 2012-08-16 1:40
Aaaand I’m in!
A couple of hours earlier I finally saw an opportunity to short NZD/USD. On the 1-hour chart I found not only a falling trend line but also a bearish divergence and a possible 50% Fib retracement. Talk about the signs lining up!
On the fundamental side, I saw that New Zealand’s manufacturing sector went into contraction last month with a 49.4 reading, its lowest in three months. Apparently, weak demand, inventory adjustment, and a strong New Zealand dollar are weighing on the investors’ optimism.
Thanks to those reports, I shorted at market (.8075) using 0.50% of my account. This time I’m using a 50-pip stop loss so it’s above the falling trend line and the previous week low that we had marked in our Comdoll Trading Kit this week.
I’m hoping that the pair would go down by the same height as our head and shoulder pattern, but for now, I’m placing my stop loss at the .8000 major psychological support.Here’s a recap of my trading plan!
Shorted 0.50% of my account at market (.8075) with a stop loss at .8125. Initial profit target at .8000, but I’ll be looking to move the initial stop to break even and add to my position if price goes my way.
What do you think? Will this land us pips this week?
Trade Idea: 2012-08-15 9:18
Good day, trader buddies! Since I’m still hurting from my AUD/USD loss last week, I’ve decided to be a little more cautious before jumping in trades this time.
Currently, I have my sights set on a potential retest of the broken head and shoulders neckline on NZD/USD. I’ve been chatting some of y’all up in my Happy Corner for Kiwi pairs and it looks like a bunch of us were watching that reversal chart pattern on NZD/USD’s 4-hour time frame!
Thanks to stronger than expected U.S. retail sales released yesterday, the pair tore the neckline down and resumed its downtrend. It looks like Kiwi bears needed to pull up for a quick retracement though, and the 50% to 61.8% Fibs look like potential resistance levels since they are close to the neckline.
We’ve got a few U.S. reports on tap for today and I’m inclined to think that the U.S. dollar could react to fundamentals, which means that stronger than expected U.S. data could be positive for the Greenback. On top of that, there could be increased demand for the U.S. dollar during the days leading up to the Jackson Hole Summit as the Fed seems more and more unlikely to implement QE3.
So, what do you think of this potential setup of mine? Do you think it can help me bounce back from my loss last week?
Have fun and good luck trading this week, friends!
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