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Trade Idea: 2012-04-12 5:45

Aaaaand I’ve broken my winning streak! Too bad!

Hmm, it seems that I have started the second quarter on the wrong foot. China’s local-currency-denominated loans clocked in at a whopping 1.01 trillion yuan in March, which is 21% higher than investors’ consensus.

Not only that, the country’s money supply also showed a 13.4% growth from a year earlier against expectations of only a 13% rise. The positive figures suggested that the Chinese economy won’t be experiencing a “hard landing” after all, so traders turned to high-yielding currencies like the comdolls. Of course, it didn’t help my trade that Italy also experienced a better-than-expected bond auction as demand for its 3-year bonds exceeded supply by 1.43 times.

NZD/USD Trade Closed

NZD/USD not only ended up blasting above the .8250 range resistance that we pointed out, but it also took out my stop loss at the .8300 major psychological handle before a downside surprise to the Chinese GDP on Friday dragged the comdoll back inside the range.

Here’s the damage:

P/L: -50 pips / -0.5%

Losing a trade isn’t the best way to start a quarter, but I remember that it’s what also happened to me in Q1 2012 when I lost my AUD/USD trade before I went on to have my winning streak. There’s hope for me still!

Thanks for supporting me on this trade, guys. Hope you all have fantastic trades this week!

Trade Idea: 2012-04-12 5:45

It looks like NZD/USD is stuck inside a small range on the 1-hour chart and a wider range on the 4-hour time frame. As you can see from the chart below, the pair is climbing close to the top of both ranges at the .8250 minor psychological level.

NZD/USD Trade Idea

The lack of hard-hitting reports from New Zealand for the remainder of the week could keep NZD/USD well within this range. However, I gotta keep my eyes glued to the upcoming U.S. data, namely the trade balance and CPI figures due today and tomorrow respectively.

I also have to be on my toes during the Chinese quarterly GDP release at 3:00 am GMT Friday in case stronger than expected results give higher-yielding currencies a reason to carry on with their rallies. Analysts expect an 8.4% reading for Q1 2012, slightly weaker than the 8.9% growth seen for the last quarter of 2011. Data from China has been impressive lately, but Forex Gump warned that there are still plenty of underlying weaknesses in the Chinese economy and these could be reflected in the GDP report.

If this trade gets triggered and the fundamental reasons tell me to hold on, I’ll be aiming for the bottom of the smaller range at .8200 for my first PT. Once price hits that level, I’ll move my stop to entry then aim for the support of the larger range, which is near PWL, for my second PT. I’ll set a tight stop above WATR for this one so that I’ll be out of the trade once the top of the range breaks.

Here are the details:

Short NZD/USD at .8250, PT1 at .8200, PT2 at .8100, stop loss at .8300.

That should give me a 1:1 potential reward-to-risk ratio for my first position and an additional 3:1 gain on my second position. I’ll be risking 0.5% of my account on this trade and if you plan to jump in with me, you should check out our risk disclosure first.

Do you think I could start the second quarter of this year with a winning trade? Let me know what you think!

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Good luck in your trades this week, buddies!

Happy time

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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.