The New Zealand dollar has been in the doldrums recently after Governor Wheeler called for a weaker NZ Dollar so the trade is against recent trends and carries more than average risk.
There has been significant strengthening of dairy prices in Europe and tightening of supply. See http://www.agrimoney.com/feature/anticipation-grows-over-dairy-auction—as-butter-rally-creates-paradox–543.html Their has been increasing divergence between EU and NZ prices… how long can this continue? Maybe this weeks auction on Tuesday will show a positive movement in NZ prices with a corresponding boost to the NZ currency.
After scanning the charts the NZDJPY cross appears in the best position to take advantage of any such movement and it may even be possible to take advantage of some seasonal yen weakness and hold this trade for a number of weeks.
Technicals: DAILY CHART We are at a minor resistance level and 61.8 Fib retrace of last move up. Stoch is starting to cycle up. 4HR CHART A scruffy looking double bottom and a higher high and retracement close to 78.6 level. Stoch is saying up. Close to MM2 (If this is bottom should get monthly move above MM4 83.31)
PLAN Look for an entry soon after weekly market open with a stop below 78.25 low. Ideal would be to make this a break even trade before news announcement then get a nice push and look for the monthly target around 83.50. If Yen is weak trade could run much longer.
Risks: Governor Wheeler retires in about 2 weeks…Will there be a policy change? Interest rate drop or continued talking currency down.
Upside; There is a nice positive carry on this pair so if you get stop to break even you will make money regardless

Daily Chart

Areas of resistance marked and Fib of last move up. Currently at 61.8

Source: NZDJPY

4Hr Chart

Monthly Pivot Points and possible 123.

Source: NZDJPY

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