Hello again my friends, I hope you all are ok because markets are living a depressive moment, fear and risk-off scenario. Well, but we are traders and instead of adopting narratives we must see what is really happening and the opportunities that we can profit from. This week I bring to you a short on EURNZD
Trade of The Week
- Symbol: EURNZD
- Side: Short
- Entry: 1.74 – 1.74600
- Stop Loss: 1.76414
- Take Profit:1.47577
The New Zealand Dollar is facing the same scenario gold is. You can understand more about this -> Bearish Reversal Explained
Markets are fueled by money and money( even if you have a lot) is finite. So once you used all the money to buy or short in the markets the only thing you can do is to sell or buy to cover and it’s exactly the case here.
Last time we had traders with such short positions was in October-2018 and you all can see whats happened. 1520 pips in 10 weeks!
Last same scenario
Do you know that a single company in New Zealand is the most important to New Zealand’s economy and is responsible for some 25% of New Zealand’s exports? It’s owned cooperatively by 10,000 farmers, Fonterra!
Fonterra once had grand ambitions to dominate the world’s dairy markets, but after suffering stinging losses to the value of its businesses abroad has scaled back its vision. Thursday announced its worst-ever annual result as it wrote down the value of its assets by hundreds of millions of dollars and promised to stay more focused on its roots on New Zealand dairy farms. Source: MarketWatch
I see this as very positive for New Zealand, because cheap NZD will boost the trade balance and increasing their competitiveness & external demand for goods & services and in the long term this always proves positive for the currency.
Why I choose EUR to fund the trade?
Inflation expectations in EUROZONE hit a new all-time low in 5y5y, so we must expect more “whatever it takes” actions from ECB including:
- Increase in QE
- More Jawboning about how deep the “Whatever it takes” actions can go
- And cuts deeper into negative territory
Source: Andreas Steno Larsen | Nordea Bank
That’s it, my friends, I hope you all make money from this if you have any question please leave a comment, I will be happy to answer you.
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