- NZD has been enjoyed a series of good fundamental datas this year, from positive GDP, surprisingly good inflation and recovery of labour market. On top of that, the high yield currency with a political stable outlook have continued to be great advantages for investors/traders to buy NZD. We had a large drop weeks ago from RBNZ jawboning its currency, but the drop came from the excessive buying in the first place and that just showed up how strong the market is for NZD. Although the central bank is trying to talk the currency down, we still think the fundamental bias is very clear in this pair. Meanwhile, CHF has maintained its negative outlook and SNB continued the negative interest rate policy. There is always going to be safe heaven inflow for CHF occasionally, but once that pass, CHF will always revert back to its fundamental negative stance. Technically we also had a nice Bullish big shadow at a nice support level of 0.72 handle.
- The catalyst was the sentiment and that even a negative GDT price today did not bring down NZD/CHF.
- We’re at a nice support area and still many rooms to go upside in the historical point of view. We do have a strong resistance at around 0.73 so we need to either take profit or move SL to BE at there.
- The risk is the sudden negative environment to push up CHF but since we have no control or prediction over that, we will simply ignore that fact and only trading the fundamentals.
- I’ll manage this trade with the fundamental datas and move SL to BE at the strong resistance of 0.73.
- Yes it’s a good trade with strong fundamental bias.
LONG @ 0.7240
move to BE at 0.7300.
We also shorted EUR/NZD with the same reason for NZD, but we have even stronger reason to short EUR.
EUR not only is in the low rate QE environment from the central bank ECB, the policy is most likely to maintain until Dec 2017.
So fundamentally the bias is strong enough to short EUR/NZD.
Furthermore, the recent elections of Dutch, France and Germany have also become a strong negative sentiment for Eurozone as people are fear for another political unstableness or worse, the end of Eurozone if France leaves Euro.
This effect has already been reflected by the dumping of French Bonds.
The panic move is real and EUR is most likely going to collapse until the end of the elections in 2017.
Technically we had a nice Bearish Big Shadow at strong resistance at handle 1.48 and large enough rooms to go downside.
SHORT @ 1.4705
SL @ 1.4865
P @ 1.4545
****updated Feb 23rd 7pm****
we have touched 0.7300 today but wasn’t able to close above, as mentioned, although NZD/CHF has a strong fundamental bias and CHF did not get buying as large as Yen in this risk off sentiment, we still want to reduce some risk because 0.7300 is a strong resistance.
I’m moving the SL of EUR/CHF to 0.7227; 10 pips below today’s low.
As for EUR/NZD, we had a very nice bearish big shadow today to take out the low of yesterday’s reversal signal.
Euro is still one of the weakest currency both fundamentally and sentimentally, we’re holding this trade and expect it to hit at least 1.4550 soon.
****updated Feb 24th 5pm****
NZD/CHF had a large retracement today but wasn’t able to closed lower and actually gave us a nice reversal single to the upside.
The weakness of CHF is very large comparison to the strength of Japanese Yen, because of that we think this pair is going to break above 0.73 and we’re still holding it.
EUR/NZD also tried to touch high but failed and gave us a nice reversal signal to the downside.
We also think the fundamental bias is still very clear and am holding this trade to the downside.
****updated March 2nd 7pm****
Our EUR/NZD trade got stopped out today. The market was selling risky assets and we saw both NZD and AUD dropped significantly today, EUR also had some nice pushed up from the inflation data that has now hit 2% as ECB’s target.
But perhaps the real reason for the loss in this trade was my own poor management. Looking back, the strong level of 1.48 was great to sell but the target should be 1.46 and at least move my SL to BE.
So in conclusion, we got in too low and therefore couldn’t move to BE because not enough room, then we got stopped out.
If we had gotten in at 1.48 handle, and SL at above, worse case scenario is that we got stopped out at BE.
Lesson learned for me as this couldn’t have been a winning trade if i had managed it better.
NZD/CHF was also almost gutted stopped out now, as we’re only 10 pips away from our SL.
Again, a poor management by me as i did not get in at a good handle, nor did i move SL to BE when we reach 0.73 as i have previously planed...
****updated March 3rd****
both trades got stopped out.