Perfect Example On How To Utilize Strong FX pair With Weak One !
There are many trading strategies out there in the world but it all does not suit us perfectly!. Therefore we end up looking for a new or revised strategy and customize it to our needs. Here i am going to explain one of the best strategy to approach the market when one FX currency has been showing bullishness both fundamentally and technically as well as sentimentally.
Currently as i write, we would all wonder everyday what could be the possible strongest FX Currency showing more bullishness at the moment so we can take advantage? Well to answer this question can be hard as the trader needs to keep up and read the fundamental aspects of each FX currencies and decide what FX currency is doing the best. A few weeks ago it was the USD and now in my opinion its the GBP! If you do your reading and technical analysis well you will observe that GBP has some pretty bright future and to add to that the pair (GBPUSD) has been rising for 4 weeks in a row!. Furthermore fundamentally its a currency that is brexit driven and recent news suggests that a deal may be about wrap up by somewhere in October 2018.
The GBP has been hit hard by brexit for a long time now, but the currency is largely undervalued by looking at the monthly charts of GBPUSD. Many GBP pairs are showing a lot of signs of bulishness at the moment and are poised for likely gains in the near term. So once you have established the strongest and the currency with a brighter future at the moment we can proceed to the next step. Now ask yourself logically, since i have found the strongest currency pair at the moment what currency should i pair the GBP with?
Its a very important question! and as traders we would always like our trade run smoothly with least disturbance as possible and therefore pairing the GBP with the weakest currency seems to be the only logical and technical option here. So coming back to step one, what is the weakest currency pair at the moment? if you read your news and do technical analysis well it might not take you too long to figure it out. For me its the NZD! Why you ask me its the NZD? Well my answer is based on my personal analysis such as looking at the NZDUSD chart its been dropping like rocket for a long time and the fundamentals are the least favorable for this pair. Not only the trade war has hit NZD hard but also their reserve bank failing to give hints on the NZD rate hike.
You may look for other currency such as the CAD, but its price is closely linked to OIL market and the volatility can make the CAD go crazy even on short terms. The USD seems to be another currency to think about, recently its showing some weakness but i see it as only temporary. The EUR is strong too at the moment and supported well fundamentally. The safehavens JPY and CHF as said are safehavens and in the event of any market turmoil they become quite volatile and change directions pretty quickly! The AUD is also quite weak at the moment but fundamentals are starting to support this pair.
So the last and final crucial step would be to shortlist the most weakest fx currencies and do technical analysis to look for LONG opportunites on higher timeframes! GBPAUD does not indicate any good long term technical opportunity to enter however the GBPNZD has provided some nice set up. Look at the main chart it can be observed that the price was confined in a range for weeks and has now broken out!. I am simply waiting for the price to retrace to 38.2 fib ratio of previous swing before i decide to go LONG on this pair!. The redline represents the target which also happens to be the strong resistance on the monthly charts. The price might likely head to that level which would give us a good risk to reward ratio possibly 1:3.
I hope this analysis would be helpful to all as for now and in the future too. Its a really well rounded good strategy pairing the strongest and the weaker pairs together to have a best possible scenario and reward. thank you and follow me if you like my analysis. If there are any signals pertaining to this pair i will post them.
Currently as i write, we would all wonder everyday what could be the possible strongest FX Currency showing more bullishness at the moment so we can take advantage? Well to answer this question can be hard as the trader needs to keep up and read the fundamental aspects of each FX currencies and decide what FX currency is doing the best. A few weeks ago it was the USD and now in my opinion its the GBP! If you do your reading and technical analysis well you will observe that GBP has some pretty bright future and to add to that the pair (GBPUSD) has been rising for 4 weeks in a row!. Furthermore fundamentally its a currency that is brexit driven and recent news suggests that a deal may be about wrap up by somewhere in October 2018.
The GBP has been hit hard by brexit for a long time now, but the currency is largely undervalued by looking at the monthly charts of GBPUSD. Many GBP pairs are showing a lot of signs of bulishness at the moment and are poised for likely gains in the near term. So once you have established the strongest and the currency with a brighter future at the moment we can proceed to the next step. Now ask yourself logically, since i have found the strongest currency pair at the moment what currency should i pair the GBP with?
Its a very important question! and as traders we would always like our trade run smoothly with least disturbance as possible and therefore pairing the GBP with the weakest currency seems to be the only logical and technical option here. So coming back to step one, what is the weakest currency pair at the moment? if you read your news and do technical analysis well it might not take you too long to figure it out. For me its the NZD! Why you ask me its the NZD? Well my answer is based on my personal analysis such as looking at the NZDUSD chart its been dropping like rocket for a long time and the fundamentals are the least favorable for this pair. Not only the trade war has hit NZD hard but also their reserve bank failing to give hints on the NZD rate hike.
You may look for other currency such as the CAD, but its price is closely linked to OIL market and the volatility can make the CAD go crazy even on short terms. The USD seems to be another currency to think about, recently its showing some weakness but i see it as only temporary. The EUR is strong too at the moment and supported well fundamentally. The safehavens JPY and CHF as said are safehavens and in the event of any market turmoil they become quite volatile and change directions pretty quickly! The AUD is also quite weak at the moment but fundamentals are starting to support this pair.
So the last and final crucial step would be to shortlist the most weakest fx currencies and do technical analysis to look for LONG opportunites on higher timeframes! GBPAUD does not indicate any good long term technical opportunity to enter however the GBPNZD has provided some nice set up. Look at the main chart it can be observed that the price was confined in a range for weeks and has now broken out!. I am simply waiting for the price to retrace to 38.2 fib ratio of previous swing before i decide to go LONG on this pair!. The redline represents the target which also happens to be the strong resistance on the monthly charts. The price might likely head to that level which would give us a good risk to reward ratio possibly 1:3.
I hope this analysis would be helpful to all as for now and in the future too. Its a really well rounded good strategy pairing the strongest and the weaker pairs together to have a best possible scenario and reward. thank you and follow me if you like my analysis. If there are any signals pertaining to this pair i will post them.
