The Weekly Update: Classic Entries in the New Zealand Dollar

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NZD Technical Analysis

Following the US Non-Farm Payrolls (NFP) on Friday the US Dollar (USD) was able to gain ground against a basket of currencies in the Foreign Exchange (Forex) market.  After analysing multiple currency pairs in the market it appears the New Zealand Dollar (NZD) is due for corrective gains. We are uncertain if the gains we are anticipating will be triggered by China CPI or the financial stability report that will be released by the Reserve Bank of New Zealand (RBNZ) on Tuesday.

The charts appear to be providing a technical signal in NZDJPY, NZDUSD and NZDCHF.  The entry in the Kiwi yen is ‘too perfect,’ which often means a larger stop is required. After studying the charts it appears that approximately +200 pips are required for the protective stop . Due to the fact a tighter stop can be used for NZDUSD and NZDCHF we are dismissing the entry in NZDJPY despite the decent risk reward ratio.  We are unlikely to opt for both Kiwi Dollar and Kiwi Swiss unless a significant bearish gap is noted.

NZDUSD Weekly Chart

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NZDCHF Weekly Chart

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NZDUSD and NZDCHF Trading Strategies

The US Non- Farm Payrolls  assisted the painting of a right-hand shoulder in NZDUSD daily chart. Although the price could still retrace lower towards 0.6470 before correcting higher it is a fairly neat entry.

NZDCHF recent dip lower markets the second bullish wave and also allows a neat entry in the market. The price may also retrace to 0.6470 before correcting higher. Kiwi Swiss gains were halted by the 44 Moving Average (MA, in blue), which forced the recent bearish retracement.

The technical structure of both NZDUSD and NZDCHF suggests corrective gains. We would prefer NZDCHF due to the positive interest that we will enjoy when the trades are rolled over but it may be down to the gap at the opening of the Forex market.

We are unlikely to opt for both trades as we have little desire of finding our place in a position where we are over exposed to the Kiwi, however, if the price posts a strong, bearish gap at the opening of the market we may choose to opt for both currency pairs.

The trade alerts details will be emailed to you after the opening of the Forex market (22:00 GMT).

NZDUSD Trade Alert Details

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NZDUSD long at market price (0.6519)
Take profit: 0.6895
Protective stop: 06372
Risk Ratio (RR): 1 : 3 (approx.)
Estimated duration: 14 days

12/11/15 UPDATE: NZDUSD is trading at 0.6543 at the time of this writing.

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Although the weekly close will be tomorrow we are closing 10% of the long trade at market price.

19/11/15 UPDATE: NZDUSD is trading at 0.6556 at the time of this writing.

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

19/11/15 UPDATE II: NZDUSD is trading at 0.6578 at the time of this writing.

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We are closing 10% of the long trade at market price and shift the protective stop to the entry.

23/11/15 UPDATE: NZDUSD triggered the protective stop at the entry, We have enjoyed positive interest on the long trade and were able to realize partials with a decent profit.

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