My NZD/USD short at 0.72509 just before noon today got stopped out an hour later at 0.72661. At least it was only a 1/2 position. I wanted to short again when NZD/USD broke 0.7280 because of the resistance as shown in Figure 1. However, remembering #1 in my newly updated 3 trading rules, I re-considered and held back. NZD/USD is testing 0.7300 at this moment, so this rule is proving itself useful already. What's interesting now is that as NZD/USD is testing 0.7300, both USD/CAD and USD/CHF are well off the support levels of 1.0700 and 1.0300, respectively. There's no particular reason for using these two pairs, they are just two pairs that I've been following. Which seems to me that the weakness is USD isn't as bad as it would seem. If it is, then US dollar would be under pressure in all fronts. And it's not now. At least not yet. Thus, not giving up on this nice setup as shown in Figure 1, I've placed a short stop entry for 50% position just below the next intraday support at 0.7262. Just to catch it on its way down from this very obvious resistance level. In any case, here're my 5 reasons for shorting based on Figure 1.
- Trend is neutral
- We're at the top of a trading range
- Near resistance at long term Fib level and round number at 0.7300
- Potential double top, although this is very uncertain
- Little breathing room in recent climb up
In summary, here is my order: Size: Half position, 3000 units Side: Short Stop entry: 0.7262 Stop exit: 0.7300, set to trail Target: 0.7132, top of that uptrending line in Figure 1 Reward / Risk = 130 / 38 = 3.42 > 3 I'm pondering should I enter 50% position when NZD/USD is hanging around 07290. But I think I'll hold it off since my USD/CHF is still open. Update: My short entry was triggered for 0.72509 (horrible spread). I was stopped out at 0.72661 an hour later for a net loss of \$4.57. This was not a good trade because NZD/USD was so close to a round number resistance that it was probable to test it.