SHORT AUDNZD - STRAT TRADE: 99.5% PROBABILITY OF REVERSAL
SHORT AUDNZD:
1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) AUDNZD has a cumulative probability of a =>7th day lower at 0.5%, hence there is a implied 99.5% chance of reversal on the daily.
2. Technically there is also some nice structure about the 1.045 level.
Trading Strategy:
1. Sell AUDNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in VERY small lots to reduce risk and ensure you can add on adverse moves lower (it could be several days). TP is the next/ First daily close higher.
Any questions please ask - also see performance attached of recent trades using the same stats
1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) AUDNZD has a cumulative probability of a =>7th day lower at 0.5%, hence there is a implied 99.5% chance of reversal on the daily.
2. Technically there is also some nice structure about the 1.045 level.
Trading Strategy:
1. Sell AUDNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in VERY small lots to reduce risk and ensure you can add on adverse moves lower (it could be several days). TP is the next/ First daily close higher.
Any questions please ask - also see performance attached of recent trades using the same stats
Comment:
Adding 2x on the close higher - remember i posted to be VERY SMALL, if you didnt do this then it defeats the point and you probably wont be able to add. we are trading probabilities not R:R gambling.
Comment:
- same principle that paid off.. theyre all just a matter of time.
I also think AUDNZD is in a justified structural downtrend especially so as the fed didnt hike which should see more kiwi yield buying in the medium-term over aussie given as we all know that the kiwi rate differential is 50bps higher than aussie. Realistically 1.00 is the fairer value, as aussie and kiwi macro econ is very similar but kiwi rates are higher, not to mention both RBNZ and RBA are at relative "sticking" points with their macro policy, both have realised the marginal returns to each cut is diminishing rapidly (with house prices an issue also) thus the 25-50bps differential is likely to coexist for sometime - add the weak fed situation in there its hard to justify AUDNZD above 1.00 in the medium term (higher rates, similar macro, similar RBNZ vs RBA). Apart from the massive "Overselling" which has caused this recovery/ profit taking rally imo, we should resume the down trend soon.