For the past several years, the New Zealand dollar (NZD) has been the weakest currency against its major competitors and after a recent and brief uptrend, I believe NZD is set to resume that weakness.
Let’s look at how to take advantage of this …
GBPNZD (the British pound versus New Zealand dollar) offers a good risk/reward on the long side:
As long-time readers will know, I was shouting from the mountain tops since late 2016 and early 2017 that GBPNZD had bottomed and would likely go higher. What prompted me to call the change in direction from the historic (and massive) downtrend to the new uptrend was a very classic double bottom price pattern.
Once the price moved through the neckline of that pattern, the new uptrend was confirmed. GBPNZD even put in a bullish rounding bottom after the double bottom, making the 1.80 price level the main support line as it was the neckline for both patterns.
This market has risen from every subsequent test of that level.
In fact, GBPNZD has continued to establish higher lows and recently made a very subtle double bottom at the 1.90 level. After a successful test of this level I feel 1.90 will hold. This means GBPNZD is ultimately headed up once again.
So I’m inherently long-term bullish on GBPNZD at time this, even though it might take a while to get started. You want to go long GBPNZD now, if you’re prepared to wait. I feel any dips are buy and hold opportunities.
Now here’s NZDCHF (the New Zealand dollar versus the Swiss franc):
As the New Zealand dollar is weaker against most other currencies (perhaps excluding the US dollar), it’s no surprise NZDCHF as been in a pronounced downtrend.
After a brief counter-trend rally, NZDCHF has put in a bearish double top. Recent price action shows that this pair is now about to dip below the neckline of that pattern.
Therefore NZDCHF looks to be a good bet on the short side, even if it proceeds in fits and starts at first.
So how’s the US dollar doing in the meantime?
Here’s USDI (the US Dollar Index):
USDI hit and temporarily exceeded a major resistance level at the height of the pandemic. Traders who chased the new highs have been trapped in what’s known as a bull trap.
It now looks like the dollar is ready to turn lower over the long run. Note how recent price action has carved out a bearish head and shoulders pattern:
A head and shoulders is a reversal price pattern. Prior to this, USDI was a rising market. Now I expect USDI to be under pressure and continue lower over time.
Last week the price consolidated, which isn’t a huge surprise considering how fast the dollar has dropped and the fact it’s August. August is traditionally a very slow, inactive month for most markets as most traders are normally on holiday at this time.
That means we may see the dollar consolidate for awhile, but ultimately I expect a lower dollar sooner or later.
If you look back at previous Augusts’, it’s usually a quieter period for traders.
The markets feel somewhat flat.
This year, things are significantly different.
Following some momentum recent trades on XAGUSD and with the USD showing major signs of weakness, monumental opportunities are everywhere.
In this week’s video report, I share exactly what’s happening and where you should be focusing right now.
- It was the weakest
currency on the board for many years, but after showing some positive recent
signs, is this currency about to plummet
to a new low?
- Why these obscure – rarely
discussed – currency pairs are throwing up some huge opportunities right now (I share exactly what is happening).
- The Head-and-Shoulders price pattern on the US Dollar and what this
means for what will happen next (this is going to be big news – don’t say i
didn’t warn you!)
- Why the GBPUSD is soon to
make a significant move that is going to cause a lot of problems for a lot of
people (watch from 5.45)
- Why the EURJPY is nearing a reflection point which means that this long-term downtrend is about to change in momentum (I’ll share how you can utilize this to grow your account) – watch from 9.55
- Has the opportunity to
profit from XAGUSD (Spot Silver) now gone? Have you missed the boat? I share
exactly what is happening and the big
long-term opportunity that is available for patient traders
- How about Gold? I share why so many traders
are going to get caught out because of “FOMO”
and why you should sit on your hands when it comes to this trade
- Plus much more
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