Trading Plan 04.27.2017 – AUDCAD, NZDJPY

Swing

*Good morning/afternoon everyone!*

The U.S. dollar did not extend its losses in the overnight session but President Trump’s tax reform disappointment should cap gains for the greenback. The big focus this morning is the European Central Bank’s monetary policy meeting. They are widely expected to leave interest rates unchanged but between stronger data and lower inflation, the market is divided on what the ECB will emphasize. Commodity currencies are mixed today with CAD finally staging a strong rally off its high and AUD, NZD under pressure. GBP is very strong but there’s resistance near 1.29.

*The MAIN THEMES I see today are*

GBP Strength

AUD, NZD weakness

CAD Recovery?

*Currencies we plan on day trading and the direction*
*These could change during the day, but for now

We will be trading around these themes –

+GBP

-AUD, -NZD, +CAD

-USD

waiting to see how market feels about EUR

*Trading Biases*
These will change after US data

mildly -EUR

-USD, -AUD, -NZD

+GBP, +CAD

:triangular_flag_on_post: *Starting Trades*

OPENED AT MARKET AUDCAD Sell

ENTRY – 1.01347

STOP – 1.01847

TAKE PROFIT – 1.01047

OPENED AT MARKET NZDJPY Sell

ENTRY – 76.628

STOP – 77.128

TAKE PROFIT – 76.328

NZD/JPY Big Trade 03.10.2016 +55

Swing

3/10- Close NZD/JPY Big trade here at 75.60 for 55

We don’t want to miss the NZD/JPY entry by a pip or too so if you want to sell here at 76.15 thats fine too

Place Order to SELL NZD/JPY at market 76.20

Stop at 78.20

USD/JPY has had a very nice run and its nearing the top of its range. We think gains are limited ahead of next week’s FOMC rate decision. So we are flipping out of our NZD/USD trade and moving into NZD/JPY as NZD/USD has found decent upside momentum

BK – NZD/JPY Short Big Trade 01.05.2016 +84

Swing

1/5 – Close NZD/JPY Short at 78.96 for +84

1/5 – First Entry Triggered

Place Order to Sell 1 Lot NZD/JPY at 79.80

Place Order to Sell 1 More lot at 81.80

Stop for ALL 83.60

Investors are still nervous and with our USD/JPY trade idea we are looking for a deeper correction before buying. With NZD/JPY we want to ride the move lower. At the very first dairy auction of the year, prices turned negative which is not a good start for the New Zealand dollar. Unexpected changes to dairy prices typically have continuation in the Asian trading session so between the drop in dairy prices and risk aversion, NZD/JPY could test the 23.6% Fibonacci retracement of the November to August decline near 77.50. The currency pair also appears poised to close below the 100-day SMA which would represent a significant trend change for the pair.

BK – New USD/JPY and NZD/JPY Big Trade Orders, Cancel EUR/USD 01.05.2016

Swing

1. Cancel EUR/USD sell order – won’t trigger any time soon

2. TWO New Big Trade Orders

Place Order to Buy 1 Lot USD/JPY at 118.20

Place Order to Buy 1 More Lot of USD/JPY at 116.28

Stop for ALL at 114.35

The meltdown in Chinese stocks has meant significant losses for USD/JPY. However last night’s actions by the Chinese government to support its sinking stock market through a short sale ban for major investors and buying of equities by state controlled funds shows how responsive China will be to disruptions in their markets. While the Shanghai Composite Index opened down 3% overnight, it rebounded to close down only -0.26%. The markets are nervous but between China’s actions and the stabilization in their stock market, we believe that the slide in USD/JPY should come to an end soon. U.S. policymakers remain optimistic that the impact of China’s rout on U.S. markets is limited. The Fed may be less discouraged to raise rates again in this environment but no one expects another rate hike until March so they won’t be talking down rate hike expectations so early in the year. In other words, monetary policy divergence still favors USD/JPY in the long run and these could be bargain levels to buy USD/JPY.

Place Order to Sell 1 Lot NZD/JPY at 79.80

Place Order to Sell 1 More lot at 81.80

Stop for ALL 83.60

Investors are still nervous and with our USD/JPY trade idea we are looking for a deeper correction before buying. With NZD/JPY we want to ride the move lower. At the very first dairy auction of the year, prices turned negative which is not a good start for the New Zealand dollar. Unexpected changes to dairy prices typically have continuation in the Asian trading session so between the drop in dairy prices and risk aversion, NZD/JPY could test the 23.6% Fibonacci retracement of the November to August decline near 77.50. The currency pair also appears poised to close below the 100-day SMA which would represent a significant trend change for the pair.

3. Big Trade Recap:

AUD/USD

Place Order to Buy 1 Lot AUD/USD at 0.7284 TRIGGERED

Place Order to Buy 1 More Lot at 0.7084

Stop for ALL at 0.6920

EUR/GBP

Order to Sell 1 lot EUR/GBP at 0.7035 TRIGGERED

Place Order to Sell 1 More Lot at 0.7232 TRIGGERED

AVERAGE Entry 0.7133

Stop for ALL at 0.7430

NZD/JPY – Right to Resistance?

NZD/JPY – Right to Resistance?

Chart Of The Day

Tomorrow is central bank day and NZD/JPY could be in for quite a ride as the one two punch of Fed and RBNZ hits the market late Wednesday afternoon. Although the market isn’t expecting any changes in policy the tone of the statement could move both USD/JPY and NZD/USD and create some massive volatility in the pair.

Both central banks are faced with the choice of what they will do in December. The Fed has been priming the market for a rate hike for nearly six months but the slowdown in global growth has forced US policymakers to take their finger off the trigger and given the tepid recent data and lack of any inflationary pressures the FOMC may decide to hold off til next year.

RBNZ on the other hand may be under pressure to cut. Dairy auction prices have declined for the first time in four months and yesterday’s Trade Balance deficit was wider than expected suggesting that exports remain under pressure.

All of this indicates that NZD/JPY may have topped out at it 81.00 level and may be on the way back to testing swing lows at 72.00

NZD/JPY – Headed for 90?

NZD/JPY – Headed for 90?

Chart Of The Day

NZD/JPY – Headed for 90?

This afternoon the Reserve Bank of New Zealand left interest rates unchanged and told us that they see a prolonged period of interest rate stability. While this is far from the hawkish view that is typically needed to lift a currency, in an environment when investors are worried about who will cut rates next, their steady outlook proved to be extremely positive for NZD/JPY. The currency pair’s gains could be extended if tomorrow’s U.S. retail sales report surprises to the upside. We believe that the February spending numbers will most likely reinforce the attractiveness of the greenback as higher non-farm payrolls, the rise in gas prices and increase in spending according to Redbook point to a stronger report. The Federal Reserve is gearing up to raise interest rates and regardless of whether it comes in June or September this prospect should continue to be extremely positive for USD/JPY and in turn NZD/JPY.

Taking a look at daily chart, the next level of resistance is at 89 the 50% Fibonacci retracements of the December to February decline. Then above that will be the big psychological resistance of 90. As long as NZD/JPY holds today’s low of 87.25, the turn is intact otherwise the currency pair could slide down to the 23.6% of 86.45.

NZDJPY31216

Big Trade NZD/JPY – Cancelled

Swing

**Given the sharp fall in dairy prices and upcoming FOMC. We are canceling these orders for now.

Big Trade – Buy NZD/JPY

Place order to Buy 1 Lot NZD/JPY at 88.27

Place order to Buy 1 More Lot at 87.35

Stop 85.70

We like the New Zealand dollar and we like USD/JPY and this combination makes NZD/JPY an extremely attractive trade.

This afternoon the Reserve Bank of New Zealand left interest rates unchanged and told us that they see a prolonged period of interest rate stability. While this is far from the hawkish view that is typically needed to lift a currency, in an environment when investors are worried about who will cut rates next, their steady outlook proved to be extremely positive for NZD. In fact NZD/USD erased all of its earlier losses to end the day in positive territory. RBNZ Governor Wheeler’s belief that inflation will pick up when oil effect passes and that New Zealand is in a different situation than many other countries suggests that they have no intention of moving rates even though they warned that the next move in rates could be up or down – this guidance should lead to a further recovery in the New Zealand dollar.

Meanwhile we continue to look for a stronger U.S. dollar ahead of next week’s FOMC rate decision. Tomorrow’s consumer spending numbers will most likely reinforce the attractiveness of the greenback as strong non-farm payrolls, rise in gas prices and increase in spending according to Redbook point to a stronger report. The Federal Reserve is gearing up to raise interest rates and regardless of whether it comes in June or September this prospect should continue to be extremely positive for the US dollar. While Fed tightening in 2015 is widely expected a change in forward guidance next week will still lift the dollar and this event risk acts as a target for dollar bulls buying into the news. If retail sales surprised to the upside like we expect, it will harden expectations for a shift in guidance that should send the greenback to fresh multi-year highs against many major currencies going into next week’s monetary policy announcement.

The Chart

NZDJPY031215

Rather than chasing the currency pair, we prefer to buy on a retrace post news. The following 15 minute chart of NZD/JPY shows are buy levels:

Big Trade – Buy NZD/JPY

Place order to Buy 1 Lot NZD/JPY at 88.27

Place order to Buy 1 More Lot at 87.35

Stop 85.70

What’s Next for NZD/JPY?

What’s Next for NZD/JPY?

Chart Of The Day

Fundamentals
Its central bank day in FX tomorrow and NZD/JPY could be at the center of the storm as traders get ready for policy makers. On the US side the Fed is expected to pretty much maintain its neutral line as low inflation and laggard wage growth are not going accelerate the normalization schedule. On the other hand the RBNZ has seen growth stabilize and milk prices rise for three consecutive months. Still the central bank may reaffirm its neutral stance in which case NZD/JPY could get whacked from both ends as the disappointment from the Fed and RBNZ push the pair lower.

Technicals
Technically the 87.00 is key support for the pair and break there opens a run towards 85.00. On the other hand a close above 89.00 would suggest that the pair has found firm support and may be ready to rally

Will NZD/JPY Hit 95?

Will NZD/JPY Hit 95?

Chart Of The Day

Fundamentals

Thanks to the spectacular rally in USD/JPY and the market’s demand for carry, NZD/JPY rose to its strongest level since 2007. Over the past 2 weeks, the currency pair soared approximately 700 pips from below 85 to above 92. While part of the move was driven by the market’s demand for U.S. dollars, a larger part of the gains were fueled by JPY weakness. The Bank of Japan’s surprise decision to ease monetary policy earlier this month kicked off the selling that was later exacerbated by the Global Pension Investment Fund’s diversification out of JGBs and talk of a delaying the next sales tax hike. Whether or not Prime Minister Abe will postpone the rise in taxes hinges on Sunday’s Q3 GDP report. If growth falls short of expectations, it will certainly fuel expectations for a later hike, driving stronger gains in the Nikkei and in turn NZD/JPY. The New Zealand dollar will also be impacted by the upcoming PMI services and Q3 retail sales report scheduled for release on the same day. Given the improvement in manufacturing activity and rise in confidence, we are looking at the possibility of an upward surprise. If both reports, come out as we expect, NZD/JPY could be on its way to 95.

Technicals

Taking a look at the monthly chart of NZD/JPY, there is no major resistance in the currency pair until 95. However if currency pair drops below 90, the losses could accelerate towards 88.

NZD/JPY – Heading to 86.00?

NZD/JPY – Heading to 86.00?

Chart Of The Day

Fundamentals

The kiwi has recovered slowly but steadily ever since the pair hit 7700 on intervention fears a few weeks back and has now come back all the way to 7900. The general decline in US rate expectations has been a help, but the relatively upbeat data out of Asia has been a support as well. This week the pair will see ANZ business confidence and RBNZ Rate statement report on Wednesday and while its likely that Governor Wheeler will reiterate that the kiwi remains overvalued he is unlikely to make further threats of intervention for the time being. Meanwhile USD/JPY was taken down a notch today on weaker housing data but tomorrow’s Durable Goods and Consumer Confidence reports should provide a boost for the pair. Taken together that means that 86.00 may be in view.

Technicals

Technically NZD/JPY has set a higher double bottom which is a bullish sign and if the pair can hold above 85.50 then 86.00 would come into view. On the downside support lies at 84.50 with much deeper support at 83.0