I know what you're thinking. Truly I must be a lunatic for shorting NZDUSD when it has already gone down so far and it's hitting the famed Golden Ratio. Well maybe I am. But I have my rationale for entering into the trade.
In September, this pair just couldn't figure out which way it was going to go. There was no clear defined trend as the bulls and the bears were duking it out. At first it appeared as October wrapped up and November began that the bears had a hold of this pair. But it soon realized it did not.
Price start taking off, with the exception of some brief struggles along the way. There was so much pressure going up, that I think the buyers just lost steam. Price fell hard and got caught in mid December, but that little indecisive candle that landed on the 38.2. For me, if the buying pressure was still strong, the retracement would have ended there and price would have continued upwards. But it had not. Price tanked all the way to the Golden Ratio. It would appear bears hold a hold on this pair for the time being.
Now here were are Christmas Eve. Coming out of a weekend and directly into a low volume holiday. And I find myself shorting NZDUSD. Even if it goes against me, I believe it will be a brief retracement before it turns back to let the bears have at it all the more.
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