NZDUSD Trade Conclusion

The NZDUSD trade I posted earlier this week didn’t go quite as well as I’d hoped, returning either 0.7% or break even depending on where you got out. Here’s how the trade unfolded:

60 minute Kiwi Dollar chart

NZDUSD: Two possible exit points, one a modest profit, one a break even trade.

We got the entry as expected with a break of the daily pivot (blue dashed line) followed by a retest, marked by the green arrow, stop loss above the bar marked with a red arrow.

The retest was also a high test, a good sign for a short trade.

Price then briefly worried us by retesting the daily pivot. If it has closed above then we would have exited for a small loss, but it simply set a lower high and at this point we drew a trend line in purple which would be our emergency exit line – any close above this trendline would invalidate the trade.

Price then tested the green dashed line of the weekly pivot before retracing and setting a new lower high, and again we drew a trendline (in green). An interesting point to note us that these two trendlines show different momentum in the market, with the green one being much more aggressive. Steep trendlines usually exhaust themselves quickly, so at this point we should be looking for signs of reversal, and we could see the first signs already with Stochastic showing reversal divergence.

The ideal exit is circled in green. This is where the the retest of the weekly pivot failed (ie it broke through and closed) and also where we have a close above the green trendline. What’s more, the bar which signaled the exit was a strong buyers bar, so we can’t expect the bears to take control any time soon.

The exit at this point banked 0.7% based on 1% risk. Not great, but not too bad during a very unpredictable week.

If you missed that exit or wanted to see if our original trendline would hold, it was given a little extra strength by the 50EMA (in red) but failed nevertheless. This confirms the bears are out of the market so, if you were still in this trade, it was time to bail out at around break even.

Let’s hope for some better opportunities next week. Have a great weekend.

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About TheDayTrader

My name is Adam. I'm a day trader. I've been trading full time, mostly Forex but stocks and indices too since 2009 and I love it. When I'm not trading, I'm writing about trading here and for trading magazines, learning to fly and enjoying country life in the Cotswolds with my wife, dog and chickens.