Forex Trading - Market Update

As the markets continues to rally based off of the latest development in the fiscal cliff talks, whether good or bad, the risk "on" trades are easy to find, while finding good places to short risk remains difficult. AUD/USD and NZD/USD which are my typical barometers of risk have gone sideways to up. I can't comfortably short a yen pair at this point given that any comment out of Abe could send the yen pairs a hundred pips higher.

So where have I found a possible opportunity to short risk? EUR/NZD. This pair offers opportunity since the Euro has been recently trending upwards and the New Zealand Dollar is much more sensitive to risk appetite. Which is to say, if the U.S. stock market starts selling off over fiscal cliff concerns, the Kiwi and the Aussie should depreciate faster than the Euro. The Kiwi in particular has been very well bid as of the last 2 weeks, so I think it has a little room to unwind even if we don't see significant risk off sentiment.

Below is a 4 Hour chart of EUR/NZD. I've outlined the levels that I'll be trading intra-day if shorting risk looks attractive going into the European or U.S. session. We are beginning to fill what we have termed a "price inefficiency." (A zone where price has moved relatively quickly through, without previous price history in close proximity behind it.) The first intra-day target would be 1.2700 and the second target would be 1.2825 which would fill the price inefficiency, signaling an exit.