Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
It is another week of dollar strength in the Fx market, with the DXY index pushing to a new local high and closing in on the 101.00 level.
As we’ve said on several occasions recently, this USD trend is likely to continue and it makes sense to stick to it. This means mainly staying with bullish USD trades, especially now that commodity-linked currencies like AUD, NZD, CAD are also turning lower.
With that being said, let’s turn to something we have not looked at in a while in our newsletter but is now starting to look more interesting from the long-term perspective. We have an AUDNZD trade idea this week, and we also examine the relative performance of the two correlated currencies and why the uptrend may continue here.
Playing the AUDNZD uptrend
Since the start of the year, AUDNZD has moved up 300+ pips, while it is up even more since the September lows of around 1.0280. This week AUDNZD tested the major psychological 1.10 level, and while it has backed off, the bull trend still seems well-established here.
On the daily chart, we can see the uptrend since mid-March. AUDNZD is now about to test its support line, which comes in around the 1.09 level. And if this uptrend will continue, this would be a good opportunity to enter long.
Look for entries around the 1.09 support with a tight stop below it. The 1.0875 level could be used as the line in the send for stop loss orders.
Entry:
- Look to enter long near the 1.09 zone; Bullish signals on lower timeframes (4H, 1H) can be used for entries
Stop loss:
Targets:
- 1st TP - 1.10
- 2nd TP - toward the upper end of the channel (line stands around 1.11 by early May)
Monthly chart shows bullish breakout of 7-year trendline
The long-term technicals are getting especially interesting on AUDNZD. This month, AUDNZD is attempting to break above a 7-year resistance trendline, which is currently located around the 1.08 area. While the month has not closed yet, and there is still some notable resistance higher (such as 1.10 and 1.12), this breakout could mark the first important technical signal for a more significant trend developing here (see below for the fundamental
factors driving this).
If April closes above 1.08, then we’ll have the first bullish signal on the monthly chart. The next thing to watch will be the important highs from the past 7 years. Those are mainly around the 1.10, 1.12, and 1.14 levels. Some or all of these technical zones would likely act as resistance on the way up.
To the downside, we’ll need to keep watching the 1.08 zone, which would become a key support zone. AUDNZD will need to hold above the broken resistance trendline and above 1.08 to maintain the bullish breakout dynamic. This 1.08 zone, if AUDNZD were to test it again, could subsequently provide great risk-reward for long-term bullish trades.
Fundamentals have turned more positive for Australia
One of the main factors driving AUDNZD higher since September, and especially since the Russia-Ukraine war, is the very favorable commodity backdrop for Australia. While NZD is also a commodity currency, the AUD is benefiting more as a major exporter of the key energy and metal commodities that have risen in price the most (such as liquefied natural gas (LNG), copper, aluminum, and other metals). New
Zealand, on the other hand, is an exporter of agricultural commodities, which are also rising, but with the main focus now going to the energy crisis in Europe, it is those commodities that are benefiting the most.
The other factor behind the Aussie’s outperformance over the Kiwi is central bank tightening expectations. The RBNZ was among the first to move on rate hikes last year, while the RBA lagged behind. This resulted in NZD strengthening vs. AUD (AUDNZD lower) last year. However, most of that move has already played out, and RBNZ rate hikes are now largely in the price of NZD exchange rates. The focus now turns to RBA
rate hikes in the future to catch up with the RBNZ and other central banks. Thus, there is larger scope for markets to move in and price in these future RBA rate hikes.
Trade signals from the past weeks
- March 10, 2022 (entry after ECB) - Short EURUSD from 1.1040, remaining ½ position closed at 1.08 = an additional +100 pips profit on the 1st ½ position which was earlier closed at 1.09
- April 13, 2022 (entry after RBNZ meeting) - Short NZDUSD from 0.6820, target at 0.6750 reached = +70 pips profit
TOTAL: +170 pips in the past week
TOTAL: +5540 pips profit since October 1, 2018
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Thank you!
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High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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