Navigating The Market : Simplified #AUD NZD 2nd Sept 19
The AUDNZD had been in a bullish trend since price bounced off at 1.0280 on 6th August 2019. That bullish move day followed by a massive price expansion the vary next day (230 pips!) thanks to RBNZ cutting their rates from 1.25% to 1.00%. NZD had been in a massive sell off across the board since then. Retail sentiment on NZD however, remains bullish NZD. Indeed, retail sentiment is looking for that reversal- believing the marked have priced in the RBNZ move. Never a good idea.
I am bearish on the NZD due to the following three things :
1) I am (trying) a contrarian trader. I generally look to trade the other side of the general retail sentiment. NZD is heavily bid in retail, so I am keen to be the in the other side (this is too simplistic and binary, I know. This is not the only parameter that influences my bias)
2) Simply look at the chart, we are in an uptrend. Stick a long term moving average there (50MA, 60MA, 67MA, 82MA, 86MA etc etc), price is trading well above that. It is tempting to trade reversal after a long trend, picking tops (and bottoms if its in a bearish trend). I am somewhat a trend following trader, discretionary. At the moment, its not the optimal time to think of shorting AUDNZD.
3) The monthly range and weekly range was reached and exceeded. Now, usually, when this happens I would shift my short term bias to a reversal mode - as liquidity "dries out" and it would the time for the banks to take profit but I believe it was due to the fundamental factor (RBNZ cutting rates), so I will maintain my sentiment bias for now.
4)I believe there will be liquidity run this week between 1.0700 to 1.07300. Plenty of potential retail buy stops there, oceans of them. Liquidity Pools are like magnets.
My plan, since I am bearish NZD, is to long AUDNZD when the usual stop hunts have been completed. I expect a stop hunt (another form of liquidity run) at 1.06500-1.06350 in the downside and then I will find a trigger to long AUDNZD. Alternatively, if the price goes up first and tap around 1.0700, I would have to assume its for trapping breakout traders and then they will take their stoploss out at 1.06500-1.06350 - in which by then, I will be looking to long AUDNZD from there.
If price continues through without touching the liquidity pool coincided at theFriday low, then I will stay on the sidelines and re-adjust my plan.
I am bearish on the NZD due to the following three things :
1) I am (trying) a contrarian trader. I generally look to trade the other side of the general retail sentiment. NZD is heavily bid in retail, so I am keen to be the in the other side (this is too simplistic and binary, I know. This is not the only parameter that influences my bias)
2) Simply look at the chart, we are in an uptrend. Stick a long term moving average there (50MA, 60MA, 67MA, 82MA, 86MA etc etc), price is trading well above that. It is tempting to trade reversal after a long trend, picking tops (and bottoms if its in a bearish trend). I am somewhat a trend following trader, discretionary. At the moment, its not the optimal time to think of shorting AUDNZD.
3) The monthly range and weekly range was reached and exceeded. Now, usually, when this happens I would shift my short term bias to a reversal mode - as liquidity "dries out" and it would the time for the banks to take profit but I believe it was due to the fundamental factor (RBNZ cutting rates), so I will maintain my sentiment bias for now.
4)I believe there will be liquidity run this week between 1.0700 to 1.07300. Plenty of potential retail buy stops there, oceans of them. Liquidity Pools are like magnets.
My plan, since I am bearish NZD, is to long AUDNZD when the usual stop hunts have been completed. I expect a stop hunt (another form of liquidity run) at 1.06500-1.06350 in the downside and then I will find a trigger to long AUDNZD. Alternatively, if the price goes up first and tap around 1.0700, I would have to assume its for trapping breakout traders and then they will take their stoploss out at 1.06500-1.06350 - in which by then, I will be looking to long AUDNZD from there.
If price continues through without touching the liquidity pool coincided at theFriday low, then I will stay on the sidelines and re-adjust my plan.
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