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The breakdown in NZD/CAD turned out to be the real deal with the pair dropping a couple hundred pips since I hopped in short. Time for a quick adjustment to reduce my risk.

Trade Adjustment: Support Break on NZD/CAD

NZD/CAD 4-Hour
NZD/CAD 4-Hour

The rally in the Canadian dollar versus the New Zealand dollar that started way back in March continued to have legs in April after the breakdown of the strong area of interest around .9300. We could possibly credit this continued move to the Bank of Canada’s hiking bias (although the did hold policy at the last meeting), as well as a recent rally in oil from a low around $62 to a high around $69 in April, and possibly on a fresh round of risk aversion sentiment in the global markets.

Since the breakdown where I shorted at .9264, sellers pushed the pair at a pretty good pace, recently hitting lows around .9060, which is very close to my initial max target of  .9020. Given that the momentum is pretty strong, I’d like to open up my max target further, but with the new month approaching and fresh economic events on the calendar, I’m gonna do so while rolling down my stop to reduce risk and lock in a very small profit. Here’s what I did:

Rolled down stop from .9445 to .9235 to lock in 0.08% profit

Rolled max target down to .8850 to increase potential return to 2.28 times my initial risk. 

Looking ahead, we’ve got several big economic events lined up early in May, most notably New Zealand’s quarterly employment report and the Reserve Bank of New Zealand’s monetary policy meeting. Canada will also release their monthly employment data just after those events, so volatility could pick up nicely for NZD/CAD to max out my gain.

If the events and markets do go my way, I’ll likely look to roll down my stop and targets once again, and if it all goes against me, well, I at least can walk away with a gain, even if it is very small. Not a bad trade, right?

So, it’s wait and watch mode for now, but look out for new posts as I may make an adjustment to my EUR/GBP short now that we’ve gotten past the latest European Central Bank monetary policy meeting. Stay tuned, good luck and good trading!

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