NZDUSD short - pinbar at significant zone

FX:NZDUSD   New Zealand Dollar/U.S. Dollar
3 months ago
The Kiwi has been loitering around the 0.73 mark for some time and has posted a significant pin bar on the daily that pushes into the significant resistance zone however closes weakly below. This is followed by a retest of half of this candle with a weak close.

This presents a high probability set up for continued falls over the coming week(s). The profit target I have set is confluence between historical weekly and recent daily activity zones.

From a fundamental perspective, the RBNZ lowered interest rates by 25 basis points to 2% which was followed by an uncharacteristic increase in the Kiwi. This can be partially explained from the fact that even following a 25 basis interest rate cut the Kiwi still offers attractive returns compared to the extreme monetary policies pursued overseas (0 and even negative in some parts of the world). The RBNZ is taking a dovish stance and hinted to further interest rate cuts and possible QE             .

For those of you who are trading the Aussie, remember that the AUD and the NZD are highly correlated so make sure that any positions taken are inline with your capital management controls. A set up of this calibre with RR scenarios suits a 2% maximum portfolio risk.

Happy trading :)
3 months ago
Comment: Entry point was hit and the tight stop loss triggered for an unsuccessful trade.

Price has started moving in the direction of the trade. In some circumstances having the stop loss above the swing high point is necessary and can lead to a higher win rate. However the downside is less favourable RR ratios.
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