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Update: GBP/NZD Long Opportunity at 2.1800

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Last updated 1/14/2010 9:34 PM EST (GMT -5) 9 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

The GBP/NZD has risen up past our first profit target.  Therefore we have moved our stop to break even (2.1800).  At this point, we will let the rest of the position ride until we either hit T2 (2.2385) or the new stop (2.1800).  Since we have reached T1, it is no longer to viable to enter this trade unless you are already in.  Below is a review of the pattern if you missed it.

The bullish butterfly pattern we posted earlier has completed on the GBP/NZD 8hr Chart.  The symmetry of this pattern is great because it has two potential point X candidates that converge at almost the exact same level.  The trade also completed with nice time convergence. 

We boughtthe GBP/NZD if it falls to 2.1800 (Point D).  Point D is located at the convergence of the following points:

To recap, we bought the GBP/NZD at 2.1800 with our stop now moved to 2.1800.  We hit our profit target at T1 (2.2084- 38.2% of CD) and our remaining profit target is T2 (2.2385- 61.8% of CD).

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  • Daily Chart - We have seen support off of the 78.6% Fibonacci retracement at 2.1718.
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  • 8hr Chart - Bullish butterfly.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

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Comments (9)

NeoFX

January 15, 2010 at 10:56 AM ET

this was a heck of a trade by the way. Didn't realize the spread on that was 30 pips but a good trade nevertheless. GREAT JOB!!
Also great job on the prev EUR/USD short at 1.4571. It took it a while and i know you took that reccomendation out but it sure got there finally. it' plummeting now. Good job to both you and Roger.

On a different note, I'm afraid both your AUD/CHF SELL as well as your new NZD/USD short are both coming up short I'm afraid.

we might've missed the train on this one. This also happened on the Sell recommendation from Roger in the EUR/AUD short on Dec 23rd before it plummeted 500 pips. he missed it by a matter of 19 pips. He reccomended we sell at 1.6333 but it only went up until 1.6318. I got in it anyway and rode it down for a great profit.

I'd take this two as well now with a tight stop. Looks like thy're headed south.
R

p.s. wonder why you guys don't reconsider sometimes when it comes so close to your entry.

bgareiss

January 15, 2010 at 12:43 PM ET

Thanks for the kind words about the GBP/NZD and EUR/USD. As far as the AUD/CHF and NZD/USD, neither of them have entered yet. So it is too early to tell what will happen with them. Also, I don't enter prematurely because it would throw off our risk:reward ratio. Starting to enter early is a slippery slope as well. How low would you enter? How do you know where? The answer is we don't know exactly, which is why we pick the area with the greatest convergence of support or resistance (our entries). Hope that helps. Brad

Vespones

January 15, 2010 at 12:42 PM ET

Hi Brad,

In the line of NeoFX, I have 2 questions :

a) do you update if recommended to close trade before reaching target ?

b) do you update if interesting to re-enter again ? I´ve seen EURAUD has been stopped by just a few pips of the bottom. I reentered again and let´s see. (It happened to me with this GBPNZD trade because I moved SL to break even days before of this update, and I reentered succesfully at a lower price)


Regards and have a nice weekend

bgareiss

January 15, 2010 at 12:46 PM ET

A) I almost never update a trade until we have hit one of our exits first. The only time I may do this is if we came one pip short of the first profit target. In this case, I would be concerned we missed the boat and may move my stop to break even.

B) I almost never reenter a trade once it has been stopped out. It is too easy to want "revenge" or to make up for that loss. More often than not I have found this results in two losses for the same wrong idea. The only time I will reenter is if I feel I made a mistake and misread the pattern. However, if I feel my initial analysis was correct and the trade just lost, then I move on to the next trade. Brad

Vespones

January 15, 2010 at 02:42 PM ET

A) I meant to say once we hit the first target profit (do you take profits then or wait till TP2?) I didn´´t take profits because I took only 1 lot, so just moved SL . Do you suggest toI wait then to TP2 ? (I know I will have to decide myself, just please tell me your view)

B) But the fact is, if you look at last failed trades, is that you were correct in the strategy , but wrong in timing or deviated by a few pips only . I don´t think it´s a revenge if you look again and seems to be right. It happened to me with CADJPY (I reentered with good results) and GBPJPY was stopped due to iliquid market conditions.


Regards

bgareiss

January 15, 2010 at 02:48 PM ET

A) Are you using mini lots or full sized lots? If you are using full size lots, it might not be a bad idea to change to mini lots. That way you could divide up trades more easily. Overall it is just more flexible. Personally, I would use just T1, because it is more consistent in my mind. But you can do whatever you want. It is a personal preference.

B) That is just my opinion after being burned enough times by reentering trades. There is no right or wrong way necessarily, but once I lose on an idea I usually just move on. Brad

NeoFX

January 15, 2010 at 03:32 PM ET

I agree Brad. But from experience, I've missed quite a few trades because market didn't trigger me on the very pip I'd planned on. a good example would be Roger's short sell recommendation on EUD/AUD about a month ago i think.

He had suggested to sell at 1.6333 and it only went up to 1.6318. we're talking less than twenty pips. And we missed a 500 pip move down (that D extension 161.8 down was at 157.14= tht's actually 600+ pips).
And i'm afraid AUD/CHF and NZD/USD may follow the same path, though I doubt these pairs will fall nearly that much.

we'll see.

p.s. what I also use in times like this is candle stick formations (i.e. huge engulfing bearish candles, Evening stars or even tweezer tops) and also any significant break of counter upward trendlines on smaller frames. On the EUR/AUD on dec 24th you had a beautiful triple top formation on 1hr chart and a great engulfing bearish candle on 4hr chart---along with tweezer tops on 30 min.

just a thought.

thanks for the reply

Doobp

January 20, 2010 at 01:28 PM ET

great job for this trade.. i was looking at ur past trades. it recorded 863 pips instead of 585 pips. this cross is too crazy.. not my cup of tea.

anyway, i suggest traders not to enter any trades in days when rumors are weighing the market down. to me, it's part of protecting capital. It's the same reason as trading heavy news.

bgareiss

January 20, 2010 at 01:31 PM ET

Yes, we record it as if we trade 1 lot for T1 and 1 lot for T2. That is why the win was higher. That is also why we double our losses (to reflect 2 lots). It isn't a perfect system, but it was what works best at the moment. I agree that trading during major news should be avoided if possible, but how do you measure rumors? Who is starting these rumors? To me, online rumors have very little to do with what the big players (who move the market) are going to do, but that's my opinion. Brad

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