Trading Forex - is NZD ready for a rally ?

  Over last few years we have witnessed historic drop in US dollar. Many currencies found themselves in a prolonged up trend, some of them reaching dizzying levels. Most notable has been Euro, which moved into all time high of over 1.6000. Canadian dollar also visited never before seen levels. Most remaining major currencies staged very impressive runs of their own. One of them was New Zealand dollar.

NZD, also known as "Kiwi" experienced perhaps the most telling rally of them all. Between 2001 and early 2008 it moved 0.4000 to 0.8200, effectively doubling in value against USD. We don't see something like this often, certainly not among currencies of major, established economies. Very impressive.

Earlier this year USD started to regain some strength. While eventually dollar gained ground on all currencies, NZD was the first one to exhibit weakness and turn. This happened in spite of having the highest interest rates in the developed world. According to some, they were the leading reason in Kiwi's earlier rise. By the time Reserve Bank of New Zealand cut rates for the first time in 5 years, NZD-USD had already lost 700 pips. That was in July.

Since then NZD experience continued fall. Being one of the so called "commodities currencies", it got under pressure when raw materials prices started to fall. After that economic news from coming from Auckland went from bad to worse: rising inflation and unemployment, huge slow down in house sales, loss of consumer confidence, etc,. List can go on and on.

By the time RBNZ was cutting rates again on September 11th, New Zealand dollar fell over 1700 to just under 0.6500. In a rather surprising move, the rates were lowered by 0.50% as opposed to expected 0.25%. Much to the surprise of trading public, this action failed to cause farther drop in NZD. There was a slide lasting couple of hours followed by a sharp rebound.

Is the worst over? While economy of New Zealand has not improved, news from other countries became much worse. It appears there is a world wide economic slow down, if not all out recession. From now on, most of the central banks are expected to be cutting rates. This means, that Kiwi will likely maintain large interest rate differential, making it an attractive instrument for investors seeking above average rates.

Looks like the recent low of 0.6500, will hold for some time. On technical bases, we can expected rally from current levels to perhaps as high as 0.7500. It is very unlikely we will see a very fast, strong move, but rather measured, steady appreciation in NZD-USD, lasting perhaps 6 months or so. Incidentally, that is not going to just against US dollar, but rather broader Kiwi strength.

It must be pointed out, that very long term charts, monthly, are still pointing to lower levels. That is in a little distant future. For now we can expect good size NZD rally, lasting long enough to present decent trading opportunity. In all likely hood, it has already started.

Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on www.spectrumforex.com . Spectrum Forex LLC offers numerous services to individual traders. He also publishes trading blog www.fxmadness.com . With questions and comments e-mail him at kulej@spectrumforex.com.

Related Articles - Kiwi, interest rates, New Zealand dollar, rally, Finance & Investment,Investment

Trading Forex - is NZD ready for a rally? by MIKE KULEJ

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Getting Started With A Forex Currency System

  Have you ever thought about trading in the forex currency system? Then you are going to have to really do your homework as to how to go about trading in it. You are going to have to be familiar with all the types of different currencies
such as the yen, U.S. dollar, euro, etc. Unlike the stock market, the forex market is available to trade 24 hours a day.

If you search the Internet, you will find that there are many programs out there that deal with the forex currency system. However, these strategies are rarely sold online. If that would be true, the owner of the system would be using these strategies to make money in trading currencies instead of spending precious time just marketing his product.

One very popular trade in the forex market is the carry trade. This is made possible due to the fact that different countries have different benchmark interest rates. These interest rates fluctuate due to economic conditions. It currently happens that when one benchmark rate is on an upward swing, another country's rate may exhibit a downward trend. Every time that you buy a currency pair having a positive interest rate differential, you will receive a credit every day for that interest rate differential. The reverse is also true.

As far as the forex currency system goes, trend trading systems try to capture certain trends. In the long term, some forex pairs trade extremely well. The trend is your friend in the forex market.

Today, there are many news trading systems in the forex currency system. Many people try to make a trade on the initial news spike after data is released. Prices can move in one direction quite quickly only seconds after a new release. This makes it an excellent opportunity to initiate a trade. If you want to get in on this and trade news spikes, you are going to have to have a very fast news feed.

If you are going to be trading in the forex currency system, you are going to have to have a broker. He or she will be able to initiate a fast execution around the news releases. Not all forex brokers can operate as quickly as you would like or need to in this very fast paced market, so be sure the broker you choose can move quickly before the major opportunity for profit goes away.

The idea of an automatic trading system that will make you gobs of money and will require minimal maintenance on your part is appealing to many people. The reasons appear obvious. Using the platform Metatrader4 is once of the most common form of automated forex trading. Unfortunately, many of these systems are not able to stand the test of time. You can find many of these automated currency systems for sale, but it comes with a high ticket price - so buyer beware!

There is so much information you must as well as terms to be memorized such as absolute rate, accumulation/distribution, pip and accreting principal swap and a host of other terms that it will make your head spin.

There are some online programs that will allow you to open a demo account and will give you a demo account to test your knowledge with so you don't have to use any of your own money. When you have mastered the techniques and are in the black when making trades, then it may be time to think about trading with real money. Remember that the forex currency system can be tricky so it would not be wise to jump into this blindly without any instruction. For more insights and additional information about Forex Currency Systems as well as several starting points for brokers and specials not advertised elsewhere, please visit our web site at http://www.forexcurrencysystems.com

Related Articles - forex currency system, forex trading, forex market, Investment

Getting Started With A Forex Currency System by JON ARNOLD

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