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EUR/NZD Flirting with Resistance, Ratcheting Stop Lower

Last updated 7/17/2012 9:21 PM EST (GMT -5) 0 Comments - Add your comment

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Matthew Weller

Technical Analyst, GFT

Follow @MWellerFX

* I am currently in Sydney, preparing for the Sydney Trading and Investing Expo  this Friday and Saturday. Please stop by the show this weekend if you’re in the area, and make sure to visit our Australian Facebook page  for a free ticket!

Last week, we highlighted a chance to sell the EUR/NZD within the context of its longer-term downtrend (see “ EUR/NZD Downtrend Sell, AUD/USD Stop Adjustment”  for more details). This trade triggered relatively quickly, leaving us short from 1.5450, and the pair continued to follow its longer-term bearish trend line lower into the weekend.

So far this week though, the EUR/NZD has merely consolidated in a relatively tight range. As of writing, the unit is testing the longer-term bearish trend line, as well as near-term resistance at 1.5410. At this point, a move above this converging resistance level would suggest that the downtrend is coming to an end, making it an ideal time to look at lowering the stop on the open short trade.

Specifically, traders could look to move the stop down from 1.5550 to 1.5430 (above the 1.5410 ceiling), locking in 20 pips of potential profit assuming normal market conditions. Beyond that, we will let the trade run for a potential move down to the profit target at 1.5250.

Potential Strategy: Move stop on open EUR/NZD short down from 1.5550 to 1.5430.

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About The Author

Matthew Weller has been actively trading the various financial instruments including stocks, options, and forex since 2005. From his first exposure to forex, Matt was fascinated by the vast liquidity and volatility offered 24 hours a day in the forex market. He has specialised in currency trading ever since.

Matthew focuses on candlestick patterns and pivot points to identify logical trade entries and exits. In addition, he has discovered a passion for teaching others about trading and has conducted over 400 educational webinars on different aspects of trading the forex market. His analysis has been quoted in Reuters, MarketWatch, and on the NASDAQ newswires.