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Gold and NZDUSD Trading Strategies
As we near the end of 2015 our bearish projections for the US Dollar (USD) remain intact. We chose to capitalise over EURUSD and AUDUSD (which are in a profit at the time of this writing) and did not take USDCHF as we wished to maintain a low market exposure. The recent retracement in USDCHF ensures the short trade cannot be taken at current levels without expecting to incur a limited drawdown that we do not wish to incur.
According to the exit polls the prior government did not win enough sits and may require to form a coalition, first of its kind since the 1970’s. We pay close attention to the latest developments in Spain as the potential crisis may force safe-haven flows into gold. We currently see no reason to take any actions in our current long EURUSD trade.
We have discussed last week about the possibility of initiating a long trade in gold.
XAU/USD Daily Chart
Please click on the chart to enlarge:
Gold Daily Chart 20/12/15
As you mat note from the daily chart gold is trading inside a range after taking out the initial resistance, which turned into an immediate support (lower black line). Initiating a long trade at current levels may require the protective stop to be layered beneath the support, which is a relatively large stop regardless of the bullish target.
XAU/USD 4hr Chart
Please click on the chart to enlarge:
Gold 4hr Chart 20/12/15
In order to consider a long trade in gold on the 4hr chart we will prefer a re-test of 1,056 or 1,059. This will substantially reduce the required stop and enhance the risk reward ratio of the long trade. The other alternative is initiate a long trade once the price breaks above the resistance, which may affirm the anticipated uptrend and may allow us to layer the stop beneath the breached resistance.
Unlike forex currency pairs gold is famed for triggering stops that are concentrated in a certain price region in our views. The entry must be precise and ensure our stops are not layered with the rest of the crowd as we have done in USDJPY. When an entry is available we will issue a trade alert via email, which will then be updated on this page.
NZDUSD Daily Chart
Please click on the chart to enlarge:
NZDUSD Daily Chart 20/12/15
As we are expecting the US Dollar weakness to resume NZDUSD is our immediate candidate following the potential for reversed Head-And-Shoulders (H&S) on the weekly chart. The price has yet to break above the neckline at the time of this writing. We cannot take a weekly entry in NZDUSD as the required stop would be fairly large.
The real technical question is whether the nearest support (in pink) will hold. If it gives way NZDUSD weakness may extend to 0.6642 before reversing higher. It is not a simple decision to make and it will greatly depends on NZDUSD opening price. If it wasn’t for the weekly chart we would have dismissed the nearest support line and wait for 0.6642 to be re-tested or for the weekly neckline to be breached by the market. If we decide to take NZDUSD long trade we will email the trade alert’s details that will be later updated on this page.
NZDUSD Trade Alert Details
Please click on the chart to enlarge:
NZDUSD Daily Chart II 20/12/15
As we cannot shift EURUSD stop to the entry we cannot take both XAU/USD and NZDUSD. due to the undesired market exposure. If we mistimed the entry 0.6642 will be re-tested. This is a risk we are willing to take as NZD is one of the commodity currencies.
NZDUSD long at market price (0.6725)
Take profit: 0.7084
Protective stop:0.6600
Risk Ratio (RR): 1 : 2.9 (approx.)
Estimated duration: 14 days
21/12/15 UPDATE: NZDUSD is trading at 0.6764 at the time of this writing.
Please click on the chart to enlarge:
NZDUSD Daily Chart 21/12/15
We are closing 20% of the long trade at market price and shift the protective stop to 0.6700.
22/12/15 UPDATE: NZDUSD is trading at 0.6800 at the time of this writing.
Please click on the chart to enlarge:
NZDUSD Daily Chart 22/12/15
We are closing 10% of the long trade at market price and shift the protective stop to 0.6740.
23/12/15 UPDATE: We have issued a trade alert in gold following the 4hr breakout and the recent retracement.
XAU/USD Trade Alert Details
Please click on the chart to enlarge:
Gold (spot) 4hr Chart 23/12/15
Gold long at market price (1,069.14)
Take profit: 1,094.00
Protective stop: 1,059.30
Risk Ratio (RR): 1 : 2.6 (approx.)
Estimated duration: 7 days
29/12/15 UPDATE: NZDUSD is trading at 0.6867 at the time of this writing. We are closing 20% of the long trade at market price and shift the protective stop to 0.6823.
05/01/15 UPDATE: NZDUSD triggered the protective stop that was shifted above the entry, ending the trade with a decent profit.
Gold has triggered the protective stop loss order, ending the long trade with a loss. Although we generally do not look back we would like to note our bullish projection for the yellow metal remained intact. The marked area highlights the time the protective stop loss order was triggered.
XAU/USD Daily Chart
Please click on the chart to enlarge:
Gold Daily Chart 23/03/16
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Last Updated on March 27, 2016