Cleopiptra

With the rate decision looming for the RBNZ on Wednesday, there’s an expectation that the Official Cash Rate in New Zealand will drop from 3.00% to 2.75%. The sell-off in the kiwi is reflecting that assumption and the pair has made a double bottom along 0.7345 and today’s 0.7339 session low.

Strong crude. Strong commodities. Dollar melting like a popsicle on a sunny day. Yet the aussie can’t get buyers to rally the pair over 1.0200 in a significant way. Why not?

In my opinion, playing data is all about expectations. What has been discounted or “baked into the cake”? It’s not an easy thing to determine and it requires price movement to be measured. Ignoring the psychological effect and volatility that accompanies economic data means that an environment a heightened risk is also going to be ignored.

This set up is a classic distribution fade or “inside-the-range” short entry that will remain valid as long as the bears can maintain selling pressure at and below the February 2 high at 1.3861.

I have been focusing on longer-term time frames and the ranges on these charts because in my opinion, this time frame offers the ability to often stand above the fray of the intraday volatility and provide a clearer (more psychologically relevant) view of the trend. This has been especially the case with the recent happenings of Egypt and Libya effecting the market around the world.

There’s been a lot of talk about why the dollar “should” go up and my take has always been that by the time I hear it, it’s been “baked into the cake” aka already discounted.

That’s not to *dis* fundamentals. I simply feel that the rally from February 2 – 12 may have been when the fundamentals were moving the U.S. Dollar Index higher.

The GBP/USD is a perfect example of a current swing buy. A “swing” is another way of saying correction or a pullback in an uptrend or bounce in a downtrend. But how much of a correction is enough to offer support in the uptrend and resistance in the downtrend?

The U.S. Dollar’s resistance at 79.00 will play a significant role in my continued expectation for the EUR/USD to bounce. I must avoid being too rigid however because a failure to notice a transition to a sideways market trend on the daily EUR/USD could put me on the wrong side of intraday trends as well as keep me bullish too long.

I did a one-hour webinar this part weekend and it was about the seven keys to my trading that I introduced here yesterday. The series will continue but I thought I’d share the notes that I used in the presentation.

I train in MMA (mixed martial arts) twice a week with one of my best friends. It’s a physical chess match as compared to the electronic chess match that is trading. I was speaking to my jiu jitsu sensei (teacher) after class today and the subject of what I did for a living came up. I explained that I was a currency trader and expected him to give me a blank stare.