Trade Closed: Fib Short on EUR/NZD
Last week I adjusted my EUR/NZD short trade ahead of a potential wrench coming at me in the form of New Zealand’s quarterly employment report, closing half of my position down at 1.6563 and rolling my stop down to 1.6875 to reduce my overall risk.
It looks like the caution was warranted as the employment report disappointed and traders were quick to sell Kiwis on the news. And when combined with the broad risk-off sentiment we saw last week, traders easily went bullish on EUR/NZD into this week to go against my position.
With the Reserve Bank of New Zealand’s monetary policy statement coming soon and the idea of last week’s jobs numbers being more likely to push the RBNZ more towards a dovish tone and bearish Kiwi behavior, I decided to close down my remaining position manually at 1.6836
Total: +101 pips avg. / +0.21% on 0.33% total max risk
From a price action standpoint, this pair is still in a downtrend, but I think the weak employment data from NZ is a short to medium term game changer and I no longer think it’s a good idea to be long Kiwis in most cases. That could change after the RBNZ monetary policy meeting, so I’ll be watching and re-assessing afterwards.
Trade Adjustment: Support Break on EUR/USD
At the end of January, I shorted EUR/USD on a break of rising lows to play my fundamental bias of favoring the Greenback of the euro as I expected more weak economic data to come out of Europe for the time being.
I initially started with 0.50% risk with the intention of getting up to my max risk of 1.00%, but missed my opportunities to short again at better prices when EUR/USD was trading as high as 1.1500 at the end of January.
EUR/USD is once again bouncing from the 1.1300 handle today, but I’m still fundamentally biased towards the Greenback over the euro as European data continues to be weak while the U.S. could see buyers if the U.S. government shutdown drama goes away, as well as seeing positive developments from the U.S.-China trade negotiations.
Looking forward to the rest of February, there are top tier events from both the U.S. and Europe to watch out for, and potentially hurt my position, but I think over all global growth concerns will be the main driver for USD support, even if we see weak U.S. economic data.
With that being said, I am putting up orders to add to my position on a bounce, but with the possibility of U.S. data hurting the Greenback, I’m going to add another small nibbler to my position. Here’s what I’m doing:
Adding a second short order at 1.1400, with the same total stop at 1.1625 and position for an additional 0.25% risk.
If triggered, this puts my average price at 1.1343 at a max risk of 0.75% if stopped out at 1.1625. But I’ve also increased my max gain from 1.20% to 2.10% at 1.0500.
If the market does get back up to 1.1500, I’ll re-assess to see if the market drivers still make sense to add my final 0.25% risk, and if not, I’ll take the whole trade down.
That’s it for that trade. Stay tuned for updates and as always, good luck and good trading!
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