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Take technical entry signals on the strongest currencies!
New Zealand is climbing its way up to the top of the pack of stronger currencies. Fundamentally, it has THE highest CPI (year over year) and has the 2nd highest interest rate out there. With the high CPI readings, traders are starting to bet that they will have to hike rates sooner rather than later. Investors love to earn "more" interest on their money. So they pour into the currency in anticipation of a higher NZD and more daily interest to come.
But you can also see this NZD strength when you compare it across the board. For instance, NZD/USD’s chart is holding up better than most other dollar pairs, NZD/JPY is holding up better than many yen crosses.
Then when you compare NZD directly with many other pairs, it shows its strength too: EUR/NZD’s downtrend due to NZD strength…AUD/NZD slumping over due to NZD strength,…GBP/NZD breaking lower to on a weaker GBP AND NZD strength.
So whether you’re a position trader (weeks to months), swing trader (days to weeks) or an intraday trader (in and out within the same day typically)…it’s always better to “buy strength” no matter what your holding period.
Therefore, a “technical buy” signal on a NZD pair may be better to take than a technical buy that shows up on a weaker currency.
So while you may look for technical entries…I also want to get you thinking about which currencies may be the best choices to pick from too…when looking for technical entry signals on your charts.
Sean Hyman
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