Yipeee! Back-to-back wins for me!
I was a bit nervous with this one because it didn’t start out too well. At one point,
I actually came within 16 pips of getting stopped out! But I had the presence of mind to stick to my plan, and fortunately, the range stayed intact and NZD/USD rallied.
In spite of a wider-than-expected trade deficit for New Zealand, NZD/USD managed to reach the top of the range and hit my profit target. The weird thing about it is that I set my profit target at .7560, which, according to my charting software, was never even reached!
Hmm… Maybe my broker has a different price feed from my charting software. In any case, my order to close the trade was executed at a price of .7555, almost at the very peak. Yahoooo!
So here’s how it all breaks down:
P/L: + 115 pips / + 2.3%
Now, let’s hope I can get a longer winning streak going!
Trade Idea: 2010-10-27 2:55
I noticed that the RBNZ rate decision was one of the main events for the week. So I went on to check the economic calendar and – lo and behold! – the rate decision is scheduled today!
The central bank is expected to keep rates on hold at 3.00% as RBNZ Governor Alan Bollard mentioned that their current monetary policy stance is appropriate. In fact, he even mentioned that rates might stay at this level for the rest of the year. Hmm, quite dovish, don’t you think? So why am I still bullish on the Kiwi?
Well, for one thing, I think the market expectations for the rate statement have already been priced in and are not likely to result in surprisingly strong moves for the pair. Besides, Bollard might have a few upbeat comments scribbled on his cue cards… Who knows? If he’s a little more optimistic this time, the Kiwi could resume its uptrend.
Aside from that, the recently reported NBNZ business confidence figure printed a large leap, from 13.5 to 23.7, and this could provide support for the Kiwi.
On a more technical note, I’m basically looking to play the range on NZD/USD. It isn’t my ideal setup since the markets have been extra choppy lately, but hey, you have to work with what you’ve got, right? Make lemon drops out of lemons I say!
The area of .7440 seems like an area of interest since it acted as both resistance and support recently so I set my order to buy at this level. Hopefully, I can get triggered if price retests support in this area.
Right now it looks like it’s on its way to doing so. The pair has been falling so fast that bullish divergence has already formed!
As for my stop, I’m looking to cut my losses at .7390, what seems like a safe distance away from the range’s support. If things go my way, I’m looking to bag profits near this week’s high at .7560. I realize I could aim higher and target the monthly high, but I don’t want to be too greedy!
So here’s what I’ve got in my bag of tricks:
Long NZD/USD at .7440, stop at .7390, profit target at .7560.
Since this trade translates to a pretty sweet risk-reward ratio (better than 1:2!), I’m risking a full 1% of my account on this one.
Wish me luck, guys!
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