Forex Technical Strategies: The New Zealand Dollar and the Fiscal Budget

NZDJPY Technical Analysis

The market’s attention was on mainly on the US Dollar (USD) in the past week. The currency was heavily sold against the Euro and the Swiss Franc in the Foreign Exchange (Forex) market. US indices such as the SP500 were fairly resilient to the news as opposed to the US Dollar.

After reviewing USD pairs and crosses we are uncertain the selling has ended. There may be some corrective gains but the general outlook is mildly bearish. We cannot initiate a trade at current levels but we will be observing all USD pairs and crosses in the next several days.

The Eurogroup meeting on Monday will discuss Greece’s debt as new austerity measures were adopted by the country. A deal is widely expected and may not have a significant impact on the Euro unless a deal will not be struck at the meeting. Despite some key economic figures that are due this week traders may pay greater attention to any relevant news related to US politics.

NZDJPY Daily Chart

Please click on the chart to enlarge:

NZDJPY Daily Chart 21/05/17

NZDJPY Trading Strategy

A firm monthly supported is noted at 75.85. The recent dip allows us to enter the NZDJPY with a reasonable stop. The support (diagonal line) has been tested by the market and was able to contain any further weakness in the cross.

Should the price gap below the support line it may not invalidate the entry but it may alter the duration of the signal. There are several price levels we may exercise for our take profit order, it greatly depends how long we wish to remain in the trade.

Despite the positive interest we have yet to remain in a trade for beyond 30 days. Although the New Zealand budget is due later this week we are expecting the initial gains to be the triggered by a weak Japanese yen. Should NZDJPY fail to gap towards 75.85 we are unlikely to tolerate moderate weakness in the cross.

Should the cross fail to post meaningful gains within the next several days we will begin liquidating the position. Our exposure to NZD will be increased should we opt for the trade after the opening of the Forex market. The BOJ affirmed it will continue with its current monetary policy until the inflation meets its target.

In our prior updates we discussed the possibility of a weak CHF. We would like to clarify that USDCHF weakness did not materialize as a result of a strong CHF but a weak USD. We have noted AUDCHF reached a fairly strong weekly support that was able to prevent steeper selling in the cross since mid-2016 (approx.).

We would have preferred a stronger confirmation AUDCHF is due to recover rather than a support line. Regardless of the gap that may or may not take place by the opening of the Fore market there are elements of risk to the long trade. We will present the chart and the strategy should we wish to opt for the trade.

We are expecting the Swiss National Bamk (SNB) to re-initiate the floor in EURCHF in the near future, which is why we are not seeking any long CHF positions in the market despite any technical signals we discover in our analysis.

The trade alert or alerts with will be issued via an email after the opening of the Forex market and later updated on this page.

NZDJPY Trade Alert

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NZDJPY Daily Chart II 21/05/17

NZDJPY long at market price (76.86)
Take profit: 80.50
Protective stop: 75.40
Risk Ratio (RR): 1 : 2.5 (approx.)
Estimated duration: 21 days

22/05/17 UPDATE: NZDJPY is trading at 77.58 at the time of this writing.

Please click on the chart to enlarge:

NZDJPY Daily Chart 22/05/17

We are closing 20% of the long trade at market price.

22/05/17 UPDATE II: NZDJPY is trading at 77.82 at the time of this writing.

NZDJPY Daily Chart II 22/05/17

We are closing 10% of the long trade at market price (We are shifting the protective stop to 76.70. Although we have a sufficient distance from the market to shift the stop to the entry we are abiding the rules of the strategy).

23/05/17 UPDATE: NZDJPY is trading at 78.25 at the time of this writing. We are closing 20% of the long trade at market price (the protective stop was later shifted to 77.50),

AUDCHF Trade Alert

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AUDCHF 4hr Chart 23/05/17

AUDCHF long at market price (0.7292)
Take profit: 0.7420
Protective stop: 0.7235
Risk Ratio (RR): 1 : 2.1 (approx.)
Estimated duration: 7 days

Note: This is not the best risk ratio bearing in mind the risks involved in the long trade as we mentioned earlier. Nevertheless we do not wish to opt for an tighter intraday stop as the spread often widens in the cross at the daily close.

24/05/17 UPDATE: NZDJPY is trading at 78.70 at the time of this writing.

Please click on the chart to enlarge:

NZDJPY Daily Chart 24/05/17

We are closing 20% of the long trade at market price (stop was later shifted to 78.04).

24/05/17 UPDATE: As noted earlier we are unwilling to tolerate the intraday range in AUDCHF as it is a 4hr entry. AUDCHF is trading at 0.7293 at the time of this writing, we are closing 30% of the long trade at market price. Should the range continue we will liquidate more partials.

25/05/17 UPDATE: We are planing to shit NZDJPY protective after the daily close. We will have minimal distance from the market but we are reluctant to allow the cross to retrace lower (stop was later shifted to 78.25).

25/05/17 UPDATE II: We decided to close AUDCHF long trade at market price (0.7253). The spread may widen at or after the daily close, which will require us to widen the stop. In addition, the entry is not meant to withstand the weekend break. AUDCHF will require to rise over +100 pips in the next 24 hours just to consider rolling the position.

Based on the above we see no valid justification to remain in the trade. We knew the risks of initiating the long trade.

26/05/17 UPDATE: NZDJPY triggered the protective stop at 78.25, we have ended the trade with a decent profit and enjoyed the positive interest a the rollovers.

As all trades are closed this page can now be accessed by all traders. Open trades and relevant intraday strategies are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.