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.

Is EUR/USD Setting Up for a Short?

Is EUR/USD Setting Up for a Short?

Chart Of The Day

The vicious one way move in the EUR/USD has been due to technical rather than fundamental factors. As we wrote earlier today, “Yesterday’s FOMC minutes made it relatively clear that barring serious exogenous shocks, the Fed is likely to begin normalizing rates at its December meeting. But the tone of the report left enough of a doubt to stop any further progress in the dollar rally. With dollar longs greatly overextended the market set itself up for a short covering rally in the majors which quickly turned into serious short squeeze by midday Asian trade.”

The rally in EUR/USD could extend towards the 1.0800 level but after that the pair faces stiff resistance and is likely to come back for at least a re-test of the key 1.0600 support, so any further probes higher are likely to provide better entries for shorts.

EUR/USD – How Far Will The Short Squeeze Go?

EUR/USD – How Far Will The Short Squeeze Go?

Chart Of The Day

Euro staged a massive near 200 point rally today, breaking both the 1.1100 and the 1.1200 handle. The ostensible reason for the rise was the was sharp drop in US yields as traders began to back away from expectations of Fed September rate hike. The recent devaluation in the yuan has spooked the market which viewed the event as a sign that Chinese economy is starting to crater, and that in turn has led many traders to conclude that Fed will postpone any action.

But the slowdown in China is likely to hit Europe just as hard – maybe even more so – as Germany’s vaunted export growth is likely to come to a screeching halt as demand form the Middle Kingdom dries up. That suggests that today’s action is much more likely a function of a massive short squeeze rather than the starts of a sustainable rally and therefore the 1.1200-1.1300 are is likely to find serious resistance for the pair capping any upside from here.