Last week was another hot week in the markets. Continued Dollar weakness pushed its major counterparts to the upside. During the week we did see some confusion, especially with NZD as there was no real direction.
This usually happens after a massive break to the upside once price has consolidated for a while. The build up before the big break are the institutions 'loading up' their orders at a discounted price, so whenever you see heavily and large consolidation, just know you need to watch carefully because a fireworks show is on the cards.
Fundamentally, USD is still looking weak with tensions with China rising, uncertainty about the election, growing coronavirus cases and everything else under the sun we have been reading lately - I don't see why any large investor would seek to purchase American assets at this time. This is why we are betting against the dollar, and NZD is about to approach a very nice discounted price at the premium price zone highlighted by the green box. Why would we ever sell here?
But like everything with trading, nothing is for certain and anything can happen. There are always lots of other external factors at play - not just the big institutional players. So don't be bummed out if your trade didn't work even though your analysis was pretty much spot on.
New Zealand was one of the few countries in Europe that had dealt with Covid-19 very well. They have really big trade partners, is the largest dairy exporter in the world, and is currently in talks with UK about establishing a trade agreement. Fundamentally, very strong and a very attractive place for people to seek business. Another reason why we are Long on NZD. Economic strength in NZD, economic weakness in USD - straight forward play.
We will enter on the basis of receiving confirmation that buyers have stepped in and taken over the sellers. I don't usually trade Mondays but if I see what i need to see with NZD I am going in long straight away and holding until TP is hit. TP is set at the resistance level, however i feel I may enter with two positions on the basis we could see another break if the dollar continues to fall. Our stop loss protected below structure. If our stop loss is hit, this just gives us another clue as to where price may be going.
Remember, the charts are always telling a story. Don't get frustrated when your SL is hit, that is the market trying to tell you something.
Happy trading.
This usually happens after a massive break to the upside once price has consolidated for a while. The build up before the big break are the institutions 'loading up' their orders at a discounted price, so whenever you see heavily and large consolidation, just know you need to watch carefully because a fireworks show is on the cards.
Fundamentally, USD is still looking weak with tensions with China rising, uncertainty about the election, growing coronavirus cases and everything else under the sun we have been reading lately - I don't see why any large investor would seek to purchase American assets at this time. This is why we are betting against the dollar, and NZD is about to approach a very nice discounted price at the premium price zone highlighted by the green box. Why would we ever sell here?
But like everything with trading, nothing is for certain and anything can happen. There are always lots of other external factors at play - not just the big institutional players. So don't be bummed out if your trade didn't work even though your analysis was pretty much spot on.
New Zealand was one of the few countries in Europe that had dealt with Covid-19 very well. They have really big trade partners, is the largest dairy exporter in the world, and is currently in talks with UK about establishing a trade agreement. Fundamentally, very strong and a very attractive place for people to seek business. Another reason why we are Long on NZD. Economic strength in NZD, economic weakness in USD - straight forward play.
We will enter on the basis of receiving confirmation that buyers have stepped in and taken over the sellers. I don't usually trade Mondays but if I see what i need to see with NZD I am going in long straight away and holding until TP is hit. TP is set at the resistance level, however i feel I may enter with two positions on the basis we could see another break if the dollar continues to fall. Our stop loss protected below structure. If our stop loss is hit, this just gives us another clue as to where price may be going.
Remember, the charts are always telling a story. Don't get frustrated when your SL is hit, that is the market trying to tell you something.
Happy trading.