Positive carry high yield currency basket

11 thg 12, 2014

In this chart we can see how the NZDCHF and NZDJPY pairs have behaved over time.
Correlation has been negative in some cases, giving place to a hedged carry trade setup, if taking solid long entries.

I decided to take on a longer term trade, by opening two long trades risking 5% of my whole account to get an expected 100% return from interest alone after a year, by using a trend following system, with a loose stop loss of 66 daily periods' average true range. The trades will be long only, and taken based on the daily/weekly charts.

The surprise decision to maintain the 5% interest rate in the Kiwi by the RNBZ gave place to a strong reaction in these two pairs, immediately invalidating intermediate term downtrend forecast signals, and thus giving place to this trade setup. This fundamental event, paired to the recent gold strength is a strong background for a long position of these characteristics.

I entered long in both pairs, at 0.7569 and 93.04 respectively.

I'll update this chart regularly.
Cheers,

Ivan.

Additional information:

actionforex.com/analysis/daily-forex-fundamentals/central-banks-decisions-support-fx-direction-20141211231140/
actionforex.com/analysis/daily-forex-fundamentals/central-bank-focus:-snb,-norges-bank,-ecb-20141211231137/
actionforex.com/analysis/daily-forex-fundamentals/rbnz-keeps-official-cash-rate-at-3.5%,-dairy-prices-to-rebound-in-2015-20141211231106/