Many investors are waiting for the AUD/NZD Bounces but Incoming Death Cross to appear and they will hold out until it does. If an investor is determined to buy at low prices then this bounce may not materialise. Traders will need to understand that all markets are volatile. When markets show signs of slowing or stagnating them will usually be followed by price increases.
Traders will want to ensure that they are ready to ride out this bearish market. In order to do this they must trade with stop losses positioned properly so that they can cut losses quickly. They also need to trade on their terms, not another market leader’s. When a new market leader appears on the charts traders will want to exit before they make a loss as this new market leader will usually cause prices to rise.
Traders will prefer to trade on bearish terms such as: If the NZD continues to show a bearish outlook then this will generally be good news for those holding shares. When bearish conditions appear they will need to cut their losses as the NZD will likely continue to fall. If the NZD continues to show a positive outlook then this is good news as the market will be supporting the upwards movement of prices. When trading in the commodity markets it is important to adopt a disciplined approach.
Most seasoned traders prefer to trade on a short term basis, so when the markets show signs of reversal they will exit the trade as fast as possible before oversold. For those who have a significant short-term investment portfolio they will also want to look out for signs of an impending bearish reversal. These reversals can be a major catalyst for sellers as they can significantly reduce share prices. A strong pullback from this type of reversal can often result in massive gains for traders.
Traders who are new to trading can be easily confused by bearish and bullish market trends. It is important to be aware of which trend is likely to benefit you most. Bearish trading is generally considered to be less profitable than is evident from the bull market. The key to bearish trading is to wait for a weak resistance level before entering a position. If a price is seen to reach a resistance level this may signal that the trend is losing steam and a bottoming out may occur.
Traders will be able to take advantage of a weak price pattern if they find that there is a consolidation phase occurring. This can often be combined with a long term upward trend if the consolidation phase is detected in its early stages. Traders who are bearish will need to focus on selling short until the trend reverses its course. Once the trend reverses, it will usually move into a consolidation phase where prices will consolidate into the original breakout area. Traders may find themselves in a consolidation zone with the trend, however once this stage is over the price may begin to move back up and this is when traders should begin to look for a top or a continuation level.
Traders will also need to monitor the trend and do their trading accordingly. If the trend is indicating that it may go down further there is the chance of AUD/NZD trading in this environment. Traders need to cut their losses now and prepare for the worst. They may decide to take a long position and try to ride the trend out in hopes of a reversal. A price action strategy which involves trading the cross of the current price and a support or resistance level is an excellent way to trade when there is a consolidation phase occurring.
New Zealand Dollar and Australian Dollar are highly correlated and if one goes up it will likely follow and if one goes down it will likely follow. The correlation between the two pairs of currencies can be an excellent indication of the directions that the markets may move. Traders should therefore look to use these correlations for technical analysis when there is a consolidation phase occurring or a consolidation phase has already occurred. Looking to the future and trading with accuracy is key when entering the Forex markets.