Looks like AUD/NZD ain’t lookin’ back! Just a few hours after I posted my short AUD/NZD forex trade idea, the pair broke below the head and shoulders neckline on the 1-hour time frame.
Here’s the zoomed-in 1-hour chart with the longer-term support and resistance levels marked:
As I mentioned in my trade idea blog entry yesterday, I was looking to short either at the top of the range or on a break of the 1.0750 area. The pair broke the neckline in the latest U.S. session but I was lucky enough to catch a quick pullback today, thanks to the medium-tier inflation data released by both Australia and New Zealand.
Since I based this trade on the 4-hour chart, I’ll be placing a wide 200-pip stop above the range resistance and a target at the bottom of the range near the 1.0550 minor psychological support. This is just enough to give me a potential 1:1 return-on-risk but I’ll be ready to add another position if it tests 1.0900 or if economic data triggers a sharp selloff.
For now, I’m in with half of my usual position size since I still plan on adding. If you’re thinking of joining me, make sure you read our risk disclosure.
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