Got a couple of technical arguments to match my fundamental long bias on EUR/NZD. Time for the uptrend to resume?
Rising Triangle Break on EUR/NZD?
I’ve got a short fundamental bias on the New Zealand dollar after last week’s bearish developments for the Kiwi (potential hung parliament & softer tone from RBNZ) and fresh catalysts from this week’s weaker-than-previous NZIER Business Confidence read and fall in Global Dairy Trade prices.
I’m pairing this up with my bullish euro bias, basing it on the latest and very positive European Sentiment Indicator data, which are at levels that haven’t been seen since 2007. We also got a hotter than expected PPI number, which likely adds to the argument of the ECB tightening monetary policy sometime soon.
In terms of price action, on the four hour chart above I’m seeing a quasi-rising triangle setup on a recent Fibonacci pullback in a longer-term uptrend (roughly 13% gain since February 2017 lows). There’s a good chance the trend could resume with the fundies lining up, but with the stochastic showing a little bit of overbought conditions, I’m gonna wait for a little pullback to go long.
Since I’m framing this on a four hour chart, I’m definitely going with my usual weekly ATR stop, while keeping my initial target around the September highs. Here’s what I’m doing:
Long half position EUR/NZD at 1.6350, max stop loss at 1.6050, initial target at 1.6650 for an initial potential 1:1 return-on-risk
I’ll be risking only 0.5% of my account on this position and as usual, I’ll look to make adjustments if my first target is reached, and likely add to my position/roll stop up to max out the trade since the pair is in a longer-term uptrend.
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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