I'm really stumped by the strength in nzd/usd. I got my head handed to me twice by this weird pair, and I've been trading forex successfully for almost three years now, so i'm not a newbie. I first went short at 0.7424 five days ago (below 78.6% fib of 7491 and 7237) was sure it would hit that fib and plunge to test 7180. Instead it kept going and had to close out my position manually at 7509 when it was evident my stop at 7535 would get hit. I then reshort at 7525 as it looked that spike was usual stop hunting. I scalped it for + 35, then placed a swing order, short at 7517 average which I AGAIN had to close out manually at 7593 (stop was 7615, which i bet would have been hit).... very annoying!! What the F*@! is going on here??! Anyone know what's going on? I know they just raised rates to 8% but there was a good ramp up a few days before announcement. That kind of news usually get sold or is already priced in. The monthly chart shows there's good resistance at 7460 - 7480, but this rampage is insane. As I type this it's still running like hell (+68) while aud/usd is only +5. Please post your thoughts on this. thanks
I'm one for three in trading the Kiwi, I took a hit yesterday after going short around 75.29. But I figured this was a long term position for me and unless the kiwi goes into the 80s, I'm going to hold and possibly even double down at some point, depending on cash available. The RBNZ is telling everyone that will listen that the currency is not sustainable at this level; the Kiwi is up 21 percent versus the dollar in the past year! If you are looking for markets at the extreme and can stomach waiting for the inevitable pop of the bubble, this is the best game on the rock. (Unless you want to go long Yen, long-term.) Can you hold out? It's not for the squeamish or draw-down averse. This currency is going to do an Iceland. Just don't know when. Remember Kiwis can't fly.
What you should really remember (because a much higher percentage of Kiwi's fly around the world than Americans, say) are 3 rules: Don't fight the trend. Trade with the trend. Repeat Rule One.
Here's Rule 4 and -- especially -- Rule 5 4. The trend is your friend. 5. Until it ends. (Ask anyone who bought QQQQs in March of 2000 or even six months earlier.)
American in Sydney here, frequently over on the North I. And, man, the bankers I know in Auckland and Wellington are all talking about getting short. I know no one advising a long NZD/USD position right now. Do you?
The trend is still your friend when it ends - I take losses like any trader. The key is to recognize potential weakness and either get in lighter, accept the potential loss, or wait. Then, when the trend reverses, wait a bit, and then start taking advantage of its friendliness. Re bankers. If they were good at prediction or trading then they wouldn't be bankers anymore. I recall when NZ/USD was around 0.48 the bankers and senior economists were saying "there's nothing to support it here ... it could go below 0.35 over the next 12 months." Personally, I'm a trader not a merchant banker so I don't know. I've been long from the 50s and have been selling a bit in the last month. But I'm still long. Don't forget it was higher against the OzDoll back in December.
Be careful about shorting NZD currently. Just talking to someone who specializes in cycles quite effectively but combines it with fundamentals. Demand for NZ products is at an all time high helped by Australia's drought and economy is booming (apparently; I live in Aus so I'm not really in touch). Environment is inflationary so more interest rate rises are likely --- draw your own conclusions. But frankly, traders who give in to the ego gratification of predicting the end of trends usually end up working in banks or something equally uninspiring. The trend is your friend (even though it will eventually bend).