NZDJPY Short – 17.11.06

Good morning all!

I hope everyone is having a good trading week..if not, there’s always another opportunity ahead!

NZDJPY has caught my eye this week and I have entered this trade short. I identified this pair on the daily chart following a key break of an uptrend line which has been in play for over a year.

NZDJPY – Weekly

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From Jul-16 to Oct-16, there has been an uptrend line which has acted as support for over a year. Following political uncertainty which was deemed bearish, we saw a selloff in the NZD. This saw a break of this uptrend line and to me flipped this pair to a bearish bias where I am now looking for shorting opportunities.

This opportunity came this week from the daily chart.

NZDJPY – Daily

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When price breaks a key level, it often likes to retest that level to confirm the break and continue with the preceding move. From the daily chart, there are a few confluence factors at play which gave me confidence in this position:

1. Break and retest of trend line turning previous support to resistance
2. A move up towards a 1 month down trend line
3. Deceleration at this zone
4. Daily 50 & 200 EMA overhead as dynamic resistance

From my point of view, these 4 factors presented a high probability trade with a move towards the downside as it would require a big fundamental change in the market for it to break these resistance levels.

Now I slightly messed up the entry for this trade given I was unable to be at the charts to time it however I utilized a fairly wide stop placement.

NZDJPY – 1hr

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After entering this position noted by the red arrow at the 78.84 level, it quickly reversed back to the 79.125 level. However as my stop was at 79.25, I was still in this position..phew! When looking at the 1hr, you can see price meeting resistance at the 79.125 noted by a double top. That presented a good level for me to place my stop above as a strong move above 79.3 would mean price breaking through the double top zone as well as the 1 month down trend line that is currently in place.

I’m aiming for the 76 level for this trade and as it currently stands should be a potential monster 7:1 risk to reward trade.

We can see from the above example that identifying a trade can often be the easiest thing to do. Timing the trade & trade management is often where the real money can be made or lost and this area is where I have messed up a lot of my trades. It’s often difficult when you see your trade down $500, $1000, $2000+ etc and being able to look at the trade objectively at this point in time is crucial. I’ve found it to be incredibly difficult at times to be able to look at one of my trades objectively given I hate admitting that I am wrong.

This however is where the trap is given we often tend to hold on to our losers longer than our winners…go figure eh!

While you may not be able to look at it objectively when you are in the trade given there is a lot to take in when the market is live, definitely spend time over the weekends reviewing your trades to see if you would have traded it differently. This is your chance to be real without being in the line of fire. As a trader, no one is there to give you a performance review and get your neck in line, it all lies with you. But who cares for those lame quarterly reviews anyway right?! I’d rather review myself daily/weekly and get to my goals sooner. You can change as quickly as the market does in this field if you let yourself, just don’t quit.


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