Global inflation updates and Fed speak were the top drivers this week, with a few country specific top tier economic events to create opportunities as well, including Aussie jobs data & U.S. CPI.
Out of six discussions, only two scenario/price outlook forecasts saw both fundie & technical arguments triggered to become a potential candidate for a risk management overlay. Check out our review on that discussion to see what happened!
Watchlists are price outlook & strategy discussions supported by both fundamental & technical analysis, a crucial step towards creating a high quality discretionary trade idea before working on a risk & trade management plan.
If you’d like to follow our “Watchlist” picks right when they are published throughout the week, you can subscribe to BabyPips Premium.
NZD/USD: Tuesday May 14, 2024
NZD/USD 2-hour Forex Chart by TradingView
On Tuesday , our strategists’ attention was on the upcoming U.S. CPI update, arguably the most anticipated event of the week and potentially the biggest driver of volatility for the broad markets.
If the inflation data came in net strong/reduce Fed rate cut odds, then our strategy was to focus on a bullish range setup on USD/CAD. And in the case were the U.S. CPI event failed to impress Dollar bulls (as markets expected), the symmetrical triangle setup on NZD/USD was our strategists’ top pick.
It looks like U.S. CPI data update did fail to impress USD bulls as the headline read came in below previous on both the annual and monthly reads, along with the Core CPI component ticking lower as well.
This was a legit fundamental trigger for our NZD/USD long bias, and with the market already breaking and trading sustainably above the symmetrical triangle pattern, odds favored more NZD/USD bulls stepping in, especially with broad market risk-sentiment already leaning positive overall.
Given that both fundamental and technical triggers played out, price moved inline with bullish NZD/USD bias and never traded below the pre-event price, odds are “highly likely” this discussion was supportive of net positive outcomes without a need for a highly complex risk management strategy/execution.
AUD/NZD: Wednesday – May 15, 2024
AUD/NZD 30-min Forex Chart by TradingView
On Wednesday, our strategists turned their focus on the upcoming Australian employment situation update, a likely catalyst for elevated volatility conditions in the Aussie ahead.
Based on our analysis in the Event Guide for Australian Jobs, odds were that the net outcome would likely be more negative than positive, signaled by recent business survey data.
For a net weak Australian jobs update our focus would turn to AUD/NZD, but if the data was surprisingly strong then then uptrend in AUD/CHF made sense in that scenario.
The Aussie jobs came in mixed, but the market took it as net weak given the big jump in the unemployment rate from 3.9% to 4.1%, the March unemployment rate revised higher to 3.9% from 3.8%, and a net loss in full-time jobs (the net headline jobs gain was all part-timers).
This outcome triggered the fundamental bearish bias on AUD/NZD, and with the market sustainably trading below the strong support area between 1.0950 – 1.0960, odds favored a potential move further lower.
Given that both the fundamentals and technicals were inline with the sell bias, price traded well below the pre-event lows at the Friday close, and move lower was relatively steady, odds are that this discussion was “highly likely” supportive of a net positive outcomes without a need for a highly complex risk management strategy/execution.
Too tired or lazy to journal? Check out TRADEZELLA! It’s an easy-to-use analytics & journaling tool that can lead to valuable performance & strategy insights! The app also features tools like trade replay & backtesting to help improve performance and sidestep avoidable mistakes. Click here to see if it’s right for you!
Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe to a service using our affiliate links, this helps us to maintain and improve our content, a lot of which is free and accessible to everyone–including the School of Pipsology! We appreciate your support and hope that you find our content and services helpful. Thank you!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.