That was fast! Bearish rhetoric from New Zealand surprised Kiwi traders during the Asia session, spiking the Kiwi lower to close out my trade. Here’s a quick review!
Trade Review: Divergence on EUR/NZD?
After shorting at market to play the bearish divergence, which came after a double top formed at major resistance, my trade is already closed.
It was a bearish outlook from the New Zealand Treasury’s pre-election fiscal update that sent Kiwi traders into bear mode. You can read more here on the update, but to summarize it was likely the lower growth and tighter labor market expectations that FX traders hitting the sell button.
EUR/NZD was a part of that move, and it only took a few hours for the pair to move up and break that major resistance area around 1.6200 before eventually hitting my stop at 1.6265 to close out my trade.
Total: -137 pips/-0.50% loss on 0.50% risk
For me, I think there really isn’t much to say as this was a good setup that reversed on a fresh catalyst that many didn’t see coming, including myself. And probably the only thing I’d change was that I did go with a tighter stop than usual on this trade as my confidence was high we’re not going to get tapering commentary from Drgahi this week, but in the future I think I’ll just stay mechanical even when all of the stars line up perfectly for a trade.
Anyways, that leaves me with one open and profitable trade at the moment. My AUD/JPY has moved my way but volatility has stalled for now as we head into the end of Summer lull and the big Jackson Hole economic symposium this week, where central bankers are chatting up the global economy and its issues. Let’s see how that plays out and I’ll re-assess to see if I need to adjust next week. Until then, stay tuned, good luck and good trading!
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