steve.jarvis's picture

The Kiwi continues to rise up through the rankings

When preparing for our weekly strategy meeting, one of the routine tasks I undertake is to analyse EVERY COMBINATION of cross-rate involving the 10 major currencies we analyse at Tradermade, namely the US, Canadian, Australian & New Zealand Dollars, Sterling, Japanese Yen, Swiss Franc, Norwegian & Swedish Krona.  What's more, I look at each rates quoted both ways, so 90 charts in total.

Doing this once a week and assigning a scoring system based on whether a particular rate is bullish, neutral or bearish, I then tot up the scores for each currency to come up with a definitive ranking order of 1 to 10, finally categorising each currency as bullish, neutral or bearish.  In my experience, if you want to spot a broad trend change in a currency early on, rather than just a view on one particular exchange rate, this is what you have to do.  IE you need to do the job thoroughly. 

Regular readers of my blog may recall me flagging up an improving New Zealand Dollar (after a long period of widespread weakness) back on 18th November.  http://www.tradermade.com/blog-content/stevejarvis/have-look-kiwi-attempting-take-flight

At that time, the Kiwi had just pulled out of the relegation zone and was showing promise.  And what promise that was!  This week it has risen to number 2 in my rankings and is only now bettered by the all-conquering US Dollar (see 5th November blog for our call on that one) http://www.tradermade.com/blog-content/stevejarvis/fistful-dollars-still-seems-be-way-world .

During the time the Kiwi has been rising up the ranking, the opposite can be said for the EURO which is now at the bottom of our neutral band (just below Canadian Dollar & Swiss Franc) and in danger of heading into the bearish group which for quite a while now has consisted of the Norwegian Krona, Japanese Yen, Australian Dollar & Swedish Krona.  

I am just showing the one chart this week - EUR/NZD - which tells the Kiwi bull story as well as anything.   Its a weekly candlestick chart going back 3 years.  The low seen in August 2012 at 1.4969 is actually the all-time low.  I can't see that holding the latest retreat for long (despite being close to bear channel support which could prompt a corrective rally) and over the medium-term I think this is heading down towards 1.44-1.46 where we have a couple of measured moves and a 10 year support line.  Would expect a recovery phase to now run out of steam by the 1.5650-1.5921 area.   

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