Revisiting NZD/CHF this week after the pair breaks consolidation to the upside with strong momentum. Is this a new leg higher in the recent uptrend?
NZD/CHF Long Setup
The economic & sentiment updates since then from New Zealand have been arguably better-than-expected (New Zealand Q1 headline retail sales down 0.7% vs. projected 1.5% slide, New Zealand business confidence rose to -46% in a preliminary May read vs. -66.6% in April), and we just got rhetoric from the RBNZ that they will hold the OCR at 0.25% until March and that they won’t be increasing quantitative easing any time soon.
I’m choosing to play this bias against the Swiss franc as global risk sentiment continues to lean positive on recovery hopes and vaccine news, and on the ongoing currency intervention story by the Swiss National Bank.
In terms of price action, it looks like it’s favoring the bulls as the pair has broken above the falling ‘highs’ pattern that I highlighted in my watchlist post two weeks ago. I’m taking that as a signal of a new leg higher in the current environment, which I will be scaling into from around current levels down to the falling trend line.
My target will be the major area of interest that served as support during the Summer of 2019, and my stop will be one daily ATR from my lower entry order / below last week’s consolidation area. Here’s what I’m doing:
Long half position NZD/CHF at 0.6000, max stop loss at 0.5860, max target at 0.6200
Long half position NZD/CHF at 0.5930, max stop loss at 0.5860, max target at 0.6200
I’ll be risking only 1.00% of my account on this position with a 2.71:1 potential R:R if both positions are triggered.
As usual, I’ll look to maximize the trade by adding to my position/roll stop up to max out the trade if traders continue to favor the Kiwi over the franc.
Of course, I’ll look to close out quickly if conditions or data changes back in favor of the Swiss franc.
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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