NZDCAD - CAD oversold leading heading into good data

2017年9月8日

NZDCAD erased all the gains from CAD rate hike.

NZD is a high yield currency so understandably if they gain significantly against low yield currency such as USD but to gain a lot against another commodity currency such as CAD is puzzeling to me. Next week there is not much news for both NZD and CAD but the most significant data left this week is the CAD employment data which is expected to be good for CAD. The general price action so far today has zero consideration for this in my opinion.

I checked sentiment all across CAD pairs and it's a general sell-off, leading by USDCAD but the actual most gain so far today is NZDCAD so I thought the odd to go short from here is better.

Technical wise, it is re-testing the resistance at 0.885 round level and Pivot 0.886. I will enter Short here.

Stop is above the Pivot and TP is around 0.878 level.

2017年9月11日

注释

I'm out of the NZDCAD trade ~1.8785. Had a really roller coaster ride with this one..from profit to adding 25% of the original position at a not so much better price, took a whole round trip back to loss => cut it with a meager profit => just to re-enter right after that => ride in into profit with the final round to the loss zone.

Overall what happens highlight to me the difficulty of controlling emotion and staying clear-headed all the time. You really need to have a strong reason to be in the market at any point in time (for me it's fundamental) and to always recognize if you are just being irrational.

When NZDCAD quickly went into my desired direction in the morning I was very happy, to the point that when it has a slight retracement into the 0.88 round level I put on 25% more of the original position, hoping to squeeze more out of this trade before UK-US traders join the fray.

To my dismay, the pair was bidded up at the beginning of the UK session and my paper profit evaporate. This prompted me to re-check the fundamental and assess if I missed anything in my analysis. What I missed is NZDCAD runs a bit far ahead of the other CAD pair in the morning and with that many profit taking, also the UK-US folks may want to have a better entry too so they refuse to push it any further. I actually exited the position at this point for a small profit. In fact my head got clear immediately once the orders are filled, this time, NZDCAD is running too far back vs all the other CAD pair thus mean only NZD is the problem and NZD in my fundamental book should not have such a run. Now I have my second chance to jump right back in after a more careful re-assessment and I'm glad I pushed through my mental block and decided to move forward with the trade. It helped make back my loss in JPY trade and then some.

Lesson summary: daily movement across multiple pairs with a same currency denominator can hint overextended move, track it and analyze it carefully.