tradingNo, I’m not talking about the fruit, although it sounds good about now.
The NZD, that’s what I mean. There are some signs, wrong, I see some signs it’s quite ripe. In fact, it might be ripe enough to fall.
First, however, my thoughts about MACD. Some years ago, when I was still using indicators, I traded MACD divergences. That’s when price of the underlying financial instrument is reaching new highs/lows but MACD doesn’t. These don’t happen very often, not nearly as often as, say, stochastics. Problem however was that they are very ambiguous. I had to sit down, go over hundreds in not thousands of charts, isolated the most successful examples and then tried to define some common characteristics.
Generally speaking, the closer the two tops/bottoms are to each other, in terms of number of bars/candles between them, the better chances of trade working out. Another identifying factor for winning divergences was the extent of the move between the two tops/bottoms. The bigger the move the better. Out of these two factors I worked out certain ratios to be assigned to emerging formation and thus create a template to sort out the ones with higher probability. So far so good. Of course there were other problems.
Clear rules had to be created for exact point of entry, possible target and stop. After much trial and error I decided that close of first candle of opposite color would be entry, with target 50% of the last move and S/L the same as target. In other words if target was 50 pips, so was S/L. I was not trying to catch exact top/bottom but to find definable entry point. After that price still needs room “to breathe”, that’s why some distance for S/L.
It all worked reasonably well, but eventually I stopped using oscillators altogether in favor of just price action. Simplicity is better.
I’m bringing it all up because I’ve been pouring over a lot of charts last week, and Kiwi caught my eye.
It looks to me that it’s ready for a reversal or at the very least some pullback within current trend, pullback deep enough so as to present opportunities.
Commercial intermission; latest update to our website
I’m back. Here is a look at daily charts of NZD against CHF, USD, EUR, GBP and JPY with some possible targets. Incidentally, most of these pairs are not covered by our services. What you see are my private ramblings.|
This particular set up looks most convincing to me and I already took this trade in my personal account. I’m looking at S/L of about 0.8850. It’s not, however a fixed number for me, but an approximate value. If the price gets there or near that value, decision will be made depending on how fast and in what manner the price got there. That applies to all other examples.
The most popular carry trade, NZD-JPY. Here the divergence is not quite complete as we don’t see a candle of reverse color yet, though the small candles indicate potential trend exhaustion.
Following examples don’t have divergences, at least not yet. As a matter of fact, they might never happen (the divergences I mean) if the prices were to reverse immediately. On the price action alone, they present low risk/high rewards possibilities. I would not put S/L to close to last high/low but keep 70-200 pips away depending on which pair and target. One doesn’t want to be stopped out on some last ditch price spike.
The last one, NZD-USD looks the least promising. Extremely long term charts, however, are giving some clues that most people will be surprised here…
All these are daily graphs. It should be no surprise it will take few weeks for these analysis to be proven right or wrong.
This is really tiresome, I feel winded. All right, now we wait. Drop kiwi, drop.
Husar.
