Trade Update: 2007-01-11 01:05
The second half of our trade was stopped out at the end of the US trading session on a spike up which I honestly couldn’t explain. It only happened in NZDUSD…weird…. So, price action pretty much stalled after the morning economic reports, which came out positive for the USD. We closed the first half to lock up +10 pips as price action seemed weak to me after the positive data, and moved the stop on the second half to breakeven. The second half got as high as +13 pips before being whipsawed out. So, our total gain for our position was +5 pips. Small, but it’s a winner.
1st half: +10 pips
2nd half: +00 pips
Position Total: +10 pips
Trade Update: 2007-01-10 10:35
We will close half of our position at .6870 to lock in +10 pips for half of our position. As we approach the end of the Euro trading session, price action continues to stall even after oil prices drop as oil inventories remain high. We will move our stop on the second half of our position to 0.6880 – breakeven. Hopefully, we can get a further boost in our position before the end of the trading day. Good luck!
Trade Update: 2007-01-10 09:15
NZD/USD trended lower during the Euro session and hit our short trigger at 0.6880. We just saw the US Trade Balance numbers released at -$58.2B – better than expected. This helped push the value of the greenback slightly, so we are currently in the money about 5 or 6 pips. The muted price action at the moment is telling me that the dollar long bias may be waning, and I may close our position prematurely. We’ll just have to wait and see…Also, oil inventories will are being closely watched today and any drop in crude may give a broad based boost to USD. So, we’ll keep an eye out on oil and price action…stay tuned for updates!
For tonight’s pick, we will take a look at NZD/USD. Like many others, the Kiwi has taken a beating against the dollar since the start of 2007, when will it end? Probably not any time soon. A lot of fundamental factors is giving me a short bias on the New Zealand dollar.
There is still a long USD bias as the possibility of a Fed rate cut seems less and less likely, especially with Chicago Fed Pres Moskow expecting to reiterate the Feds concerns on inflation tomorrow and the strong jobs data we saw last week. On the Kiwi side of the pair, the New Zealand dollar has been weakend on carry trade liquidation. Also, without economic data in the line up out of New Zealand for a while, the currency may continue to drift lower, especially if we don’t see a rebound in commodities.
The pair has been in a downtrend since the new year before retracing and heading back lower after touching the 38% Fib line as shown on the chart. We will look to short below the previous low and S1 pivot line at 0.6880. A break below this support area should bring the pair down to the swing low at 0.6836.
We do have event risk tomorrow at 8:30 am EST, with the US Trade Balance number forecasted to be -$60.0 billion. Any number above that, especially -$57.0 billion, should increase our chances of a profitable trade. Here’s a short trade idea:
Short NZD/USD at 0.6880, stop at 0.6920, pt1 at 0.6860, pt2 at 6840
Remember to never risk more that 1% of your account on any single trade, so please adjust your position sizes accordingly.
Good luck and good trading!