This article is Part 2 of a series.
EUR/NZD managed to get up to my conservative orders to open up my short position, but with the negative risk environment outweighing the fundamentals, I decided to close this trade early to limit my loss. Here’s a quick review.
EUR/NZD Fib Short Play
A couple of weeks ago, I decided to short EUR/NZD to play both the fundamentals of New Zealand and Europe, as well as the broad positive risk sentiment environment due to the stimulative measures from China and signs of a vaccine in the works for the Coronavirus.
This has ultimately been a negative for EUR/NZD bears like myself, and with the odds of this scenario sticking around, as well as the market breaking above my technical argument of resistance at the Fibonacci retracement area on the daily chart above, I decided to close down the position manually early (1.7394) to limit my max loss.
Total: -244 pips / -0.40% loss on 0.50% max risk
Overall, a really good setup with both the fundamentals and technicals lining up for me, but as usual, risk sentiment was the main driver and simply shifted 180 degrees from where we were just two weeks ago. No choice but to close on EUR/NZD, but I will keep an eye on the pair and potentially hop back in if we see the situation improve (e.g., spreading slows down, a viable vaccine will become available, more government stimulus, etc.) and the fundies still make sense. So, that’s it for now, but stay tuned for updates.
Andas always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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Read more about this trade idea's development over time.
With risk sentiment shifting back towards positive and the RBNZ meeting ahead, I’m taking a shot at this simple chart pattern on EUR/NZD.
EUR/NZD triggered my orders to go short, but with the negative risk environment outweighing the fundamentals, I decided to close this trade early to limit my loss.