The sharp rise in NZDUSD has give some signs of exhaustion in the recent trends.
June 09, 2017 Stochastic death cross death cross from above 80, bearish signal (1st signal)
June 14, 2017 the RSI moved from 74 to 64 the next day (2nd signal)
June 19, 2017 MACD death cross with histogram being negative, although the signal line was still above 0, this was medium bearish (3rd signal)
Fundamental
1. New Zealand just printed their GDP that missed estimates
2. Current account deficit most since September 15 2015 (Q2). Although the trade balance is high, this was due to an lower import price vs export price, hence the current account deficit.
3. Milk prices dropped (-0.8%), although this is small relative to many weeks of gains, if next milk price drop as well it could be used to add another short position
4. Housing is still an issue for RBNZ, they will refrain from raising rates as it may put pressure on its home prices.
5. NZD TWI (Trade Weighted Index) shows an increase of 4% since last RBNZ meeting, could cause pressure for RBNZ to verbally intervene in the near future.
Counter argument
1. Most RBNZ interest meeting did not have a dovish stance on the NZDUSD level.
2. Still one of the highest interest rate currency
3. Rising Milk prices vs dropping in iron ore prices supports short AUDNZD, which support long NZDUSD
As there are still some counter argument and the downward trend has not yet fully materialized, I used tight stop and small size trade as an initial entry trade 1 lot. The double zero and the previous high provides strong top side resistance. There are many ways to play with an trade, depending on the price action tonight, these are some scenarios i am looking at.
1. If the entry trade is filled and the stop loss is not, we can see if today NZDUSD closes below 0.7300. Should that happen we might be able to see an extension move downwards on Monday, even if the move is not a huge drop, we can shift the stop on Monday to 0.7295 where we entered the trade, which would be come a zero risk trade.
2. If the trade is filled and then plunges, we just might be able to catch the top of the recent trend, as it is touching a downward trendline. This would allow us to add another lot should there be another trigger to an bearish signal.
3. should the entry trade get filled and goes straight up pass previous high, we might be able to see it target 0.7350, which would allow us to enter the position at an even better price.
Please let me know what you think, comment below.
June 09, 2017 Stochastic death cross death cross from above 80, bearish signal (1st signal)
June 14, 2017 the RSI moved from 74 to 64 the next day (2nd signal)
June 19, 2017 MACD death cross with histogram being negative, although the signal line was still above 0, this was medium bearish (3rd signal)
Fundamental
1. New Zealand just printed their GDP that missed estimates
2. Current account deficit most since September 15 2015 (Q2). Although the trade balance is high, this was due to an lower import price vs export price, hence the current account deficit.
3. Milk prices dropped (-0.8%), although this is small relative to many weeks of gains, if next milk price drop as well it could be used to add another short position
4. Housing is still an issue for RBNZ, they will refrain from raising rates as it may put pressure on its home prices.
5. NZD TWI (Trade Weighted Index) shows an increase of 4% since last RBNZ meeting, could cause pressure for RBNZ to verbally intervene in the near future.
Counter argument
1. Most RBNZ interest meeting did not have a dovish stance on the NZDUSD level.
2. Still one of the highest interest rate currency
3. Rising Milk prices vs dropping in iron ore prices supports short AUDNZD, which support long NZDUSD
As there are still some counter argument and the downward trend has not yet fully materialized, I used tight stop and small size trade as an initial entry trade 1 lot. The double zero and the previous high provides strong top side resistance. There are many ways to play with an trade, depending on the price action tonight, these are some scenarios i am looking at.
1. If the entry trade is filled and the stop loss is not, we can see if today NZDUSD closes below 0.7300. Should that happen we might be able to see an extension move downwards on Monday, even if the move is not a huge drop, we can shift the stop on Monday to 0.7295 where we entered the trade, which would be come a zero risk trade.
2. If the trade is filled and then plunges, we just might be able to catch the top of the recent trend, as it is touching a downward trendline. This would allow us to add another lot should there be another trigger to an bearish signal.
3. should the entry trade get filled and goes straight up pass previous high, we might be able to see it target 0.7350, which would allow us to enter the position at an even better price.
Please let me know what you think, comment below.