NZDUSD Looking for Short Signals and observing PA
Updated
Currently still long on this pair as we approach 20th January for the big Twitter loving man's big day. Having trouble digesting the election, nomination processes and 'press' releases as I try like everyone else out there, to figure out what Trump will do with regards to his policies.
If Trump is going to pivot his policies toward protectionism and balancing US trade deficits then Trump would want to bank on lower USD rates in the mid to long term. However, this is easier said than done as the US is not the most nimble in regards to getting all their ducks lined up, so to speak. There are far too many independent bodies that will / can influence and maybe even counter Trumps policy goals ( FED, Unions, trade consortiums etc etc ). All this talk of a trade war has me sided with the Chinese ( sadly ) as not even the Russians with Putin at the helm can outmaneuver China in swiftly turning policy into action at a snap of Xi's fingers. So before I get carried away and start a thesis on trade economics and macro policies - I will focus on my outlook for this pairs price action.
Outlook now is that market sentiment is still heavily bias towards political uncertainty, people are still trading emotionally - May's speech and GBP is a prime example. Expect high volatility on announcements and any snippet of 'news' so as for USD and Trump effectively starving everyone of information regarding his policies.... well I'm in the camp that believe Trump is not as daft as he seems. His media game put him where he is now and he will leverage that against the market in full force Friday. So I expect this pair to swing wildly come Friday however before we get there, we still have:
Diary auctions expected to see ~3% increase in which will move NZD and I'm in the camp that think US inflation data will miss forecasts which will lead a mid week bullish drive that will likely break the 0.7250 level and really test 0.7300 due to strong NZD sentiments. While both 0.7250 and 0.73 exhibit historical resistance, 0.730 shows more fib confluence and also sits on the upper TL of white channel that can be seen on long time frame charts. So if 0.7250 is broken then be on the lookout for repeated retests 0.73 level before Friday.
Beyond 0.7300 we have the ever strong psychological barriers of 0.74 and 0.75. These will be treated as 'last stand' levels for USD bulls so if 0.730 is broken before Friday then expect strong fights at these levels.
Looking at the mini channel that PA is currently respecting ( green dotted ) I would suspect that PA will remain in this channel until towards end of the week before it flattens out Friday. When volatility kicks in, expect PA to fluctuate between 0.73 and 0.72 before there is a clear winner between bulls and bears. For these eager to go fishing and catch 'volatility entries', then 0.74 would be a good place to look. I know that not many traders on this forum are fans of 100 pip SL's but if risk is managed correctly, then those seeking entries by 'fishing' should well consider SLs above 0.75 in order to survive the spikes in PA for decent amount of pips.
Safer traders should look for a clean break of 0.72 and the lower TL of the mini channel before entering short for sub 0.700 targets.
As always - wait and see. So have a good week and safe trading - manage your risk!
If Trump is going to pivot his policies toward protectionism and balancing US trade deficits then Trump would want to bank on lower USD rates in the mid to long term. However, this is easier said than done as the US is not the most nimble in regards to getting all their ducks lined up, so to speak. There are far too many independent bodies that will / can influence and maybe even counter Trumps policy goals ( FED, Unions, trade consortiums etc etc ). All this talk of a trade war has me sided with the Chinese ( sadly ) as not even the Russians with Putin at the helm can outmaneuver China in swiftly turning policy into action at a snap of Xi's fingers. So before I get carried away and start a thesis on trade economics and macro policies - I will focus on my outlook for this pairs price action.
Outlook now is that market sentiment is still heavily bias towards political uncertainty, people are still trading emotionally - May's speech and GBP is a prime example. Expect high volatility on announcements and any snippet of 'news' so as for USD and Trump effectively starving everyone of information regarding his policies.... well I'm in the camp that believe Trump is not as daft as he seems. His media game put him where he is now and he will leverage that against the market in full force Friday. So I expect this pair to swing wildly come Friday however before we get there, we still have:
- US inflation data
- NZ Diary
- CNY GDP
Diary auctions expected to see ~3% increase in which will move NZD and I'm in the camp that think US inflation data will miss forecasts which will lead a mid week bullish drive that will likely break the 0.7250 level and really test 0.7300 due to strong NZD sentiments. While both 0.7250 and 0.73 exhibit historical resistance, 0.730 shows more fib confluence and also sits on the upper TL of white channel that can be seen on long time frame charts. So if 0.7250 is broken then be on the lookout for repeated retests 0.73 level before Friday.
Beyond 0.7300 we have the ever strong psychological barriers of 0.74 and 0.75. These will be treated as 'last stand' levels for USD bulls so if 0.730 is broken before Friday then expect strong fights at these levels.
Looking at the mini channel that PA is currently respecting ( green dotted ) I would suspect that PA will remain in this channel until towards end of the week before it flattens out Friday. When volatility kicks in, expect PA to fluctuate between 0.73 and 0.72 before there is a clear winner between bulls and bears. For these eager to go fishing and catch 'volatility entries', then 0.74 would be a good place to look. I know that not many traders on this forum are fans of 100 pip SL's but if risk is managed correctly, then those seeking entries by 'fishing' should well consider SLs above 0.75 in order to survive the spikes in PA for decent amount of pips.
Safer traders should look for a clean break of 0.72 and the lower TL of the mini channel before entering short for sub 0.700 targets.
As always - wait and see. So have a good week and safe trading - manage your risk!
Note
Looks like PA is following green channel after breaking and retesting upper TL. Looks like 0.7250~ may be the shorting area with current momentum. Expecting PA to start leveling off by US afternoon today so will monitoring PA for short entriesNote
Note
Entered new long for TP just below 0.73 PA bounced from 0.7250 as expected and retesting recent highs Note
Note
Target reached for long scalp to 0.73. Likely see some sort of retracement here for 0.7250 levels. Not sure if we will see one more move up as there is some clear divergence forming. looking for short entries pending PA and Trump action
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