During last week, the commodity currencies saw a significant boost. Both the Canadian Dollar and the Australian Dollar had a good size rally, which came in response to employment numbers, that turned out to beat expectations. By comparison, the new Zealand Dollar improved on rising commodity prices. That’s the media story. In reality, the NZD most likely benefited form the surge of the other dollars, a sympathy move, as it is sometimes called.
For these rallies to continue, more positive fundamental news will be needed. And these news should be surprises, too. Otherwise it is very unlikely that they’ll have any lasting power on their own. On the other hand, any global economic slowdown signs, or renewed sovereign debt problems, will probably put an end to these moves. And that could be swift, too. Nothing is imminent at the moment, but over next few days or couple of weeks, we might see a reversal of fortunes for the commodity currencies.
The Pound-Kiwi is one of the possibilities. This cross was discussed here not that long ago. Since then the GBP-NZD advanced from 2.0800 to 2.2100, before falling last week on NZD strength, as well as some Pound weakness,too. Currently the price is at 2.1150 or so, nearing the last support. This presents possible buy opportunity, with relatively small risk and a very good objective. But few conditions would have to be met first.
Just like few weeks ago, the daily chart should create a strong candlestick reversal pattern, before a long entry is attempted. This chart offers two different stop levels, at most recent lows. Both are respectable, depending on where the actual entry would take place. First objective should be just below the last high, or 2.2100, while more long term goal (or second trade) could target 2.3200, some weeks down the road. The Three Line Break char, plotted in the bottom window pane, also support a longer term reversal here.
Here is another long term chart of GBP-NZD, going back couple of years. This one has 2MACD Signals indicator plotted over the price. This indicator is very visual and gives color defined buy and sell signals. We can see that this pair has been a sell for well over a year, but the indicator is about to switch to a “buy” mode. It doesn’t mean it will happen tomorrow, but increases the probability for a more significant reversal. Now it is a matter of timing…
On a more immediate time line, I’m looking for a sell in CHF-JPY, if the the price breaks to 83.40. Small target, 70 pips here. Trade will be cancelled, or postponed, if the sell level is breached right out of the gate. Just like last week, more weakness in the Swiss Franc is expected, including the EUR-CHF pair. Also, opening gaps could be a play, as it is a case after every weekend. Something to look for and possibly exploit, mostly in the Yen pairs. And the Aussie, too.
Mike K.
Man, this is an interesting indicator. Do you use it often?
No gaps today and the Franc is not weakening. Looks like we have to wait. Are we still on for Friday?
No Andy, not really. But I find it interesting and maybe a have play here, so I included it.
That’s right, quiet opening. But take a look at CHF-JPY now and give it some thought. Yes, Friday is still on!
[...] but on balance, might as well have taken a day off. However, the trade discussed Pound-Kiwi daily chart post, a sell in CHF-JPY, was triggered when the Swissy went through a minor sell [...]
[...] Pound-Kiwi daily chart | fxmadness.com On a more immediate time line, I’m looking for a sell in CHF-JPY, if the the price breaks to 83.40. Small target, 70 pips here. Trade will be cancelled, or postponed, if the sell level is breached right out of the gate. … View full post on CHF/JPY – Google Blog Search [...]
[...] or reversing. And this is happening on relatively minor negative news, just as I speculated in the Pound-Kiwi daily chart post. Any more fundamental announcements that fall short of predictions will probably result in [...]
[...] is happening on relatively minor negative news, just as I speculated in the Pound-Kiwi daily chart post. Any more fundamental announcements that fall short of predictions will [...]
[...] or reversing. And this is happening on relatively minor negative news, just as I speculated in the Pound-Kiwi daily chart post. Any more fundamental announcements that fall short of predictions will probably result in [...]
[...] During last week, the commodity currencies saw a significant boost. Both the Canadian Dollar and the Australian Dollar had a good size rally, which came in response to employment numbers, that turned out to beat expectations. … View full post on CHF/JPY – Google Blog Search [...]
[...] Pound-Kiwi daily chart During last week, the commodity currencies saw a significant boost. Both the Canadian Dollar and the Australian Dollar had a good size rally, which came in response to employment numbers, that turned out to beat expectations. … View full post on CHF/JPY – Google Blog Search [...]
[...] immediate, with the AUD falling rather sharply. It has since recovered against some currencies, but remains very sensitive to the slightest bad news. And, frankly, the CPI news release is typically nowhere near as important as rates or employment [...]
[...] immediate, with the AUD falling rather sharply. It has since recovered against some currencies, but remains very sensitive to the slightest bad news. And, frankly, the CPI news release is typically nowhere near as important as rates or employment [...]
[...] AUD falling rather sharply. It has since recovered against some currencies, but remains very sensitive to the slightest bad news. And, frankly, the CPI news release is typically nowhere near as important as [...]