Trade Idea: 2011-10-05: 07:24:23
After trading AUD/USD and USD/CAD for weeks at a time, I think it's time to give some love for the Kiwi! After all, it did show a 7:1 reward-to-risk trade setup last week.
This time around I'm seeing a possible Fib retracement setup on the 4-hour chart. The pair bounced off the .7500 handle yesterday and it looks like it's heading up to the .7700 resistance area. If the pair reaches the level, then Stochastic will probably be in the overbought region by then, and complete the bearish divergence signal that I'm watching.
With China enjoying a holiday week and New Zealand not scheduled to release any economic report till next week, I'm betting my best pair of shoes that the Kiwi will spend the rest of the NFP week trading on risk sentiment.
The comdolls enjoyed a nice rally yesterday after Bernanke hinted at the possibility of more QE, and now traders are suggesting that the relief rally will continue for the next few sessions.
Fundamentally though, nothing has changed in the euro zone. EU leaders are still eons away from agreeing on a solution to the debt crisis, and the U.S. economy is still popping up worse-than-expected economic reports.
In any case, I'll be watching this trade idea closely. Right now I'm planning to short at the .7700 -.7750 area depending on the Stochastic signal and place my stop above the .7800 psychological level. If the pair drops without hitting my entry target, then I might have to look for another place to enter, or maybe another setup from the other pairs.
What do you think of this trade idea? Can you suggest any tweaks I can make?
Trade Update: 2011-10-06: 10:24:23
Ooh, the technical signals are lining up quite nicely for my short NZD/USD trade! Now that the pair reached my entry area, I decided to just go for it.
When I checked the 4-hour chart a few minutes ago, I noticed a neat little doji that formed right on the .7700 handle. Unfortunately I wasn't able to short right at that level since I was still waiting for news from the BOE and ECB statements.
It turns out that Mervyn King and his men over at the BOE decided to pull the trigger on more asset purchases since the U.K. economy badly needed support. On the other hand, ECB President Trichet announced that the central bank kept rates on hold, but they also released a few measures to boost liquidity.
Around the time the news reports are spreading, Stochastic reached the overbought region on the 4-hour timeframe, signaling that Kiwi bulls were running out of steam. Could this mean that the risk rally is over? Well, we're about to find out!
Since I decided to wait for a bit of confirmation, I was able to enter the short trade at .7670 and I set my stop 90 pips above that. I'll still be aiming for the .7500 level, which is near the pair's recent lows.
Here are the details:
Short NZD/USD at .7670, stop loss at .7760, pt at .7500. I risked 0.5% of my account on this trade.
Do you think I could score another win with this one?
Stopped Out: 2011-10-11 2:24
Ever wished that you closed your trade before a major economic report was released? I know I have! At least for this trade anyway.
After pulling the trigger on my NZD/USD Fib retracement setup last Thursday, I kept it open believing that traders would soon be on risk aversion mode, if not on a profit-taking frenzy ahead of the NFP report.
I guess I should've listened to the saying "no position is a position" because the NFP surprisingly came in at a much higher figure than expected, which easily boosted NZD/USD all the way to my stop loss. I know that it was a risk that I chose to take, but darn, how I wish the pair had gone the other way. *sigh*.
Oh well, at least the data showed that the U.S. employment scene isn't as bad as forecasted and I guess I should be happy for that alone. But I have to get ready for this week if I don't want to miss any more setups like the AUD/USD winner I spotted last week!
Got any trade ideas for this week? I'll be right here on any of these pages!
@Happy_pip Twitter
Playing with Comdolls Facebook page
Happy Pip Comdoll Corners
MeetPips.com
Chips, dips, and happy pips!
On Wednesday October 5th, 2011 at 04:03AM by Pipster4lyphe - Like - 0 People
At this point I cannot suggest any tweaks as I'm eyeing the same levels that you're looking at, except that my entry is some 15 pips above yours. What area are you looking to take profit.
On Wednesday October 5th, 2011 at 04:29PM by mathejo - Like - 0 People
On Wednesday October 5th, 2011 at 04:58PM by RazorX - Like - 0 People
I'm right with you on this one happypip!
Good luck!
@ Mathejo - never heard of it. I take it it is a forex broker? I think you should start your own blog about it so it pops up on the main screen. Provide a bit of background info etc... cheers RazorX
On Wednesday October 5th, 2011 at 06:12PM by ireitz - Like - 0 People
Been watching the NZDUSD set-up - it looks like its not going to get all the way up to 7700. I'm waiting for the 5ema to cross down over the 10ema on the 4hr chart and then I will take the trade if RSI lines up. Keen to hear what you're going to do. Thanks Irma
On Wednesday October 5th, 2011 at 07:19PM by adamskiinasia - Like - 0 People
On Friday October 7th, 2011 at 01:36AM by Happypip - Like - 0 People
@Pipster4lyphe My trade is currently staying alive, but I'm looking to see if the NFP report will take it to my profit target of 0.7500.
@ mathejo - try checking CFTC or NFA if they have anything on etoro. :)
@ ireitz -Hope you made pips on your trade plan! :)
On Saturday October 8th, 2011 at 01:40AM by ireitz - Like - 0 People
Yes thankyou, I did make pips, but fear got in the way and I exiited before the close on Friday evening. Still happy!!
On Monday October 10th, 2011 at 07:52PM by Happypip - Like - 0 People
Cool. Congrats on exiting early! :)
On Monday October 10th, 2011 at 09:00PM by adamskiinasia - Like - 0 People
Ooh. learning with the cool, calm ladies. Nice.
On Monday October 10th, 2011 at 09:03PM by adamskiinasia - Like - 0 People
Excellent trade. Could you tell me what your routine is ? Do you check each time frame on each pair ? Every morning ? Do you start with the daily then move down to the 1 minute or do you use the 1 minute only for entry and exit points.
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