News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here: https://t.co/1oeXWEsJkb https://t.co/x8uyOHLtgE
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your $USDCHF market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/CaMR0Vqd1m
  • The US Dollar lost ground to most ASEAN currencies as Emerging Market assets climbed despite US economic woes. USD/INR is eyeing third-quarter Indian GDP at the end of the week. Get your market update from @ddubrovskyFX here:https://t.co/urDN2b5Nwd https://t.co/toSDbVZCSi
  • The global stock market can be categorized into specific groups or ‘stock market sectors’. Organizing the vast number of stocks in this way helps traders to view assets in a more manageable way. Get your stock market sectors basics here: https://t.co/5gbiHmY8yl https://t.co/mQ6ty8Yalv
  • The Euro looks poised to continue gaining ground against haven-associated currencies and may reverse higher against the British Pound in the near term. Get your #Euro market update from @DanielGMoss here:https://t.co/oRIHju7ZzK https://t.co/dIEErVzWEY
  • Gold and silver prices have come under significant pressure recently. However, this correction lower could prove short-lived as price analysis hints at a reversal higher. Get your $XAUUSD market update from @DanielGMoss here:https://t.co/K1qL0fsGwy https://t.co/tRfjlN6X22
  • The S&P 500, Dow Jones and crude oil prices have recently made critical advances to the upside. Is retail positioning supporting the case for further upside momentum?https://t.co/rfA2TsBctB https://t.co/SNoOEVLXvA
  • An improving economic backdrop is bolstering crude oil prices and in turn, the Canadian Dollar. Still, the risk-sensitive Australian Dollar continues to move higher. Get your market update from @FxWestwater here:https://t.co/NJ683bZKpe https://t.co/zt3bYddjZ6
  • Gold Price Forecast: Dovish FOMC Could Underpin Bullion Ahead of NFP - https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/11/27/Gold-Price-Forecast-Dovish-FOMC-Could-Underpin-Bullion-Ahead-of-NFP.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr #Gold #XAUUSD $GOLD $GLD https://t.co/N9ChZOqSdy
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.42% 🇦🇺AUD: 0.35% 🇳🇿NZD: 0.30% 🇨🇦CAD: 0.20% 🇯🇵JPY: 0.16% 🇬🇧GBP: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/4uyJxc09OH
Kiwi All Time High and Negative SSI Creates Buying Opportunity

Kiwi All Time High and Negative SSI Creates Buying Opportunity

2011-07-08 15:40:00
Jeremy Wagner, Trading Instructor,
Share:

You may have heard the cliché of “buy low and sell high”. Breakout trend traders know that when prices reach levels never seen before, then there is unusual strength in the trend. Therefore, the breakout trend traders axiom is “buy high and sell higher”.

The NZDUSD has been in a strong trend to the upside and recently reached all time highs. Interest rate differentials between the NZD and USD economies have been wide for some time. Large interest rate differentials tend to lead to strong trends in a risk taking environment. A strong stock market for the past 2 years is evidence of the risk appetite of investors as they seek higher yields. ( “ The Carry Trade” )

Kiwi_All_Time_High_Creates_Buying_Opportunity_body_Picture_1.png, Kiwi All Time High and Negative SSI Creates Buying Opportunity

(Created using FXCM’s Marketscope 2.0 charts)

Additionally, our in house proprietary indicator (SSI) is suggesting that higher prices are in store. There are nearly 6 times as many short traders as long traders. 85% of the traders are trying to pick a top against a strong up trend in the NZDUSD. SSI can be a powerful contrarian signal when the SSI traders are trading against the trend.

The Trade

Since the NZDUSD has been in a strong trend, a trending, breakout, or momentum type of strategy is our better choice.( “ Trading Breakouts” ) When trading with SSI signals, I prefer to use a breakout type of strategy. The reason is because with a little bit of practice, breakout trades can be identified using only a basic understanding of support or resistance.

Kiwi_All_Time_High_Creates_Buying_Opportunity_body_Picture_2.png, Kiwi All Time High and Negative SSI Creates Buying Opportunity

(Created using FXCM’s Marketscope 2.0 charts)

Trading Plan to Follow:

  1. In an uptrend, identify resistance on a chart time frame of 1 hr or larger. For this example I will use the 4 hr chart. ( “How to Trade with Support and Resistance” )
  2. Place an entry order to go long 1 pip above the identified resistance level. Resistance is at .8334 so the entry order is placed at .8335
  3. Place a stop loss about 10-15 pips below the next level of support. Support is at .8232so the stop loss is placed at .8220.
  4. Risk no more than 5% of your account balance on ALL open trades.

In this case, since the NZDUSD is trading at all time highs, I will manually trail my stop since I don’t want to limit any profit potential. After all, if the trend is strong enough to push to all time highs, then maybe the trend can push my trade for a while. If the exchange rate prints a series of higher lows, manually trail the stop so it is placed10-15 pips below the next swing low.

For more daily updates on FXCM’s Proprietary indicator SSI and how to use it, log into DailyFX Plus with your live FXCM account username and password.

Jeremy Wagner contributes to the Instructor Trading Tips articles.

http://www.dailyfx.com/how_to_trade_forex/course_trading_tips

To receive more timely notifications on his reports, email instructor@dailyfx.com to be added to his distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES