FullTimeTrader
Long

NZDJPY- How to build the story of a pair

FX:NZDJPY   New Zealand Dollar/Japanese Yen
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Some traders ask me wich indicators or trading system i use. But i think that any trading system is good, as long as we use it together with the price action and fundamental information.
We must build a STORY of every pair (thats what a mentor told me). I recently understood the significance of this concept.
Here is an example of my story about the NZDJPY             pair:

1) After a sharp decline mainly due to end of yen QE             , the RBA announces cut rate 2015-02-02. The NZD gains strength and becomes the most yielding currency.

2) Necessary technical rebound after a strong rally near 90.000. Price tends to react to round numbers

3) Price regain confidence and break important level 90.000. Many traders thought it would rally higher.

4) FEAR: rumors that RBNZ could cut rates also. The NZD loses power very quickly against all currencies .

5) 2015-03-11 The RBNZ announce no cut rates, the NZD rallies again. After that the market becomes sideways waiting for the FOMC announcement.

6) 2015-03-18 After the FOMC announcement the market has clear direction. The NZD gain confidence again and breaks the level 90.00 easily to reach new highs. Unless something drammatically happens i think the targets shown at the chart are reachable.

This post shows us the importance of building a story of every pair. Its not just a matter of using indicators and trading systems mechanically (they are secondary). Building a story will make us better traders.

Best regards



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