Busy week for both of the pairs I’m currently playing, EUR/NZD long & AUD/JPY short. Here’s a quick update on the adjustments I’m made.
Trendline Retest on EUR/NZD
It wasn’t really bad luck this time around, but more an entry placement that was a little too cautious this time around. I saw that support was forming around the 1.6400 handle, but because of Draghi speaking this week and the final decision from the New Zealand First party on who they will support, I decided to wait and see if I could get in at a better price by placing my buy orders at 1.6300 instead.
Since then, buying support held at 1.6400 and then we got a really bullish catalyst today thanks to New Zealand First’s (NZF) decision to back Labour instead of National, which sparked fears of protectionist policies coming to New Zealand. The reaction was blistering as the bears hopped on the decision like wildfire, sending the Kiwi lower across the board and in a big way.
Long story short, EUR/NZD went from 1.6400 to just under 1.6900, a big +2.00% move and I wasn’t able to trade it. With the market far above my entry orders, I’ve decided to close my orders to buy at 1.6300 and count this one as a missed trade.
In hindsight, the move could have easily gone the other way if the NZF went the other way, and that was a situation I wasn’t too confident enough to make a trade on. Sure I missed a big move, but I’m good with my decision for the conservation entry strategy.
Rising Lows Break-n-Rest on AUD/JPY?
Since entering short AUD/JPY at market last week it looks like the bulls have had steady control, pushing the pair higher from my entry level at 87.96. This was due to a round of global risk-on sentiment & positive Aussie data like another better-than-expected read on jobs data.
Today was a new narrative though as the Japanese yen did find some bullish legs, possibly after we saw weak earnings reports from Europe, and the ongoing spat between Spain and Catalonia.
I’m still bearish on the pair fundamentally for now, and I see a couple of technical arguments to stay in this short.
First, we can see bearish candle formations on the four hour chart above with a shooting starish or tweezer topish pattern formed right on the rising trendline. Second, stochastics are back in overbought territory, and with risk aversion creeping back in, I think there’s a good chance of a move back to the downside.
So, I’m holding onto this trade for now, but if broad risk sentiment comes back as it usually does, I think I will look to cut this trade manually to limit my loss.Stay tuned for this potential adjustment, and until then, good luck and good trading!
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