First I hope you traded with a stop loss if you were long. This mini-crash got came in with a lot of margin calls. Secondly, don’t fret; things get worse before they get better. Now, this 5 minute 900 pips move down might be caused by two things: the first being French Hollande’s tough stance about Britain moving out of the Euro zone where he said things about price being paid, and well the Pound came crashing down or secondly, a major shift of trend. Looking at the monthly chart, there is a very profound buy signal being printed by the stochastics deep in the oversold territory. Look at how the bears have been in command since the beginning of the year when price was overextended and above the upper BB and compare it to current price levels and behavior with the Stochastics and BB. My two cents for this is based purely on the charts. Monthly chart shows that there is an obvious lower BB candlestick hugging which signals high momentum and there will be potentials moves down. Secondly, just like last year’s CHF crash, I will practice caution and wait for a clear move or shift in trend before initiating a move in either direction and will be skewed towards a GBP demand. The shift in trend cannot be ruled out as these kinds of moves can mean immense GBP demand as the NZD is unloaded to the masses. So, I would be inclined to wait for a buy signal and enter in the daily chart in the coming weeks.
This is how I will trade this pair and post the entry here as usual.
I will look to buy at any retracement back and above the 20 day moving average in the daily chart once there is a bullish confirmation candle in the weekly chart. This will be somewhere in at 1.78-1.80 region with my first TP region being in the 1.95 support zone and then any break above that, my TP will be at 2.03.
The opposite will happen if today’s low at 1.63 is cleared.
For now, observe the pair till late next week when there will be a clear movement. For now buying or selling this pair will be like catching a falling knife not unless you are well padded.
For the NZDUSD pair, look forward for today’s NFP at NY Open and look to add to our shorts. Continue shorting NZDCAD and NZDCHF while buying the EURNZD.
Have a good trading day and weekend.