Looking at that NZD trade @ 22.45 GMT. Have you ever heard the old saying "buy the rumor and sell the fact"? Well, to me, this looks like a classic set up for this. The NZD/USD pair closed at around 2605 on Friday and as of 20.00 GMT, it's sitting at about 2700. The NZD/JPY pair has also gone up about 90-100 pips since the Sunday open. The value of the + number in the trade balance report has already been priced in. So, what is a likely scenario for this trade?
It looks like the report will come out NZ+ and if it does what may happen is a small (12-15 pip) spike up, followed by a retrace that could go anywhere, followed by another spike up, the height of which will be determined by how much the carry trade drives the price. The interest rate players have a lot of control in this market; they're gonna look to take their profits, then push the price back up, because the value of their interest rate trades is that much greater, the higher the value of NZ goes.
If you want to play this trade and i'm assuming that the report will be NZD+, here are a couple of suggestions:
1. Conservative: what for the spike and the retrace, then buy after the retrace has reversed 15-20 or so pips.
2. Aggressive: What for the spike, then sell after about a 10 pip drop. Ride that down as far as you can. When it starts to go back up, close your position. Wait another 15-20 pips or so, then buy again. Good luck
NewstraderFX
It looks like the report will come out NZ+ and if it does what may happen is a small (12-15 pip) spike up, followed by a retrace that could go anywhere, followed by another spike up, the height of which will be determined by how much the carry trade drives the price. The interest rate players have a lot of control in this market; they're gonna look to take their profits, then push the price back up, because the value of their interest rate trades is that much greater, the higher the value of NZ goes.
If you want to play this trade and i'm assuming that the report will be NZD+, here are a couple of suggestions:
1. Conservative: what for the spike and the retrace, then buy after the retrace has reversed 15-20 or so pips.
2. Aggressive: What for the spike, then sell after about a 10 pip drop. Ride that down as far as you can. When it starts to go back up, close your position. Wait another 15-20 pips or so, then buy again. Good luck
NewstraderFX