Reactive trading and news trading - the strategies that are based on your interpretation of the events - are always a hot topic. While it is popular among cryptocurrency enthusiasts, who may have access to the best first-hand knowledge about the coins they are trading, it may be not the best strategy when trading Forex.

In this post, SimpleFX will introduce you to a currency pair that may suit traders that want to make decisions based on technical analysis, not news. In this case, you want to avoid the drama and forex mainstream. You don't want to trade pound sterling among the Brexit turmoil. You want volatility, strong trends with no prolonged consolidations on relatively high volumes - a choppy market trading sideways.

There is a currency pair that shares these features - it's AUD NZD called within forex lingo Aussie/Kiwi.

Both currencies are considered risk-on. This combination helps you avoid situations where a big economical or political event blows-up the strategy you built on the technical analysis. If you are trading a risk-on currency - like the Australian dollar or New Zealand dollar - against a risk-off currency that is considered a safe investment in times of high uncertainty - such as Japanese yen - you are prone to unexpected situations.

Trading two risk-on currencies at the same time make your trading strategy more robust.

Advertisement
Trade AUDNZD

On the other hand, both Australia and New Zealand have been able to stay away from the global headlines. There's hardly ever a top breaking news story about these markets.

As for the currency pair itself, it has all the qualities a day trader looks for. It is highly volatile (although not the most volatile pair there is, which may expect the relatively low popularity of Aussie/Kiwi).

As you can see in the 1D chart below AUD NZD trends strongly. There are very short sideways drifts in the pair, and most often you can identify them clearly as consolidation periods due to a lower trading volume.

 

AUDNZD is showing some serious volatility. Source: SimpleFX WebTrader

Strong trends are much easier to trade. Nevertheless, many forex traders choose pairs that are very tricky. Just take a look at the very popular EURUSD. You can see very long periods where the market is undecided and it is very difficult to make money trading at this time frame. These sideway trends are not obvious consolidations, so it's even more difficult to implement any trading strategy effectively.

The volatility is quite strong since the two currencies although in the same region don't correlate much. Being relative neighbors the two economies are perceived more like rivals big institutional investors can choose from.

One last but not least feature of the Aussie/Kiwi pair is the early timezone. If you are trading daily candlesticks from Europe, the Americas, Africa or the even Middle East, the news that may affect your strategy come very early in the cycle. You can adjust your positions if anything unexpected happens, which makes it an even more comfortable forex instrument for traders that want to focus on technical analysis rather than reactions to the news.

 

https://editorial.azureedge.net/miscelaneous/EURUSD-636850484448221884.png

Trading EURUSD can be very tricky

Because of all the above characteristics, AUD NZD is a good pair to test your trading system, since there are not many external events that may blow up your otherwise sound trading strategy.

Trading in the products and services of SimpleFX may result in losses as well as profits. In particular trading in leveraged products, such as but not limited to, cryptocurrency, foreign exchange, derivatives and commodities can be very speculative. Losses and profits may fluctuate both violently and rapidly.

Education feed

Editors’ Picks

EUR/USD tops 1.12 amid risk-on mood, ahead of data

EUR/USD is trading around 1.12, the highest since March. The safe-haven dollar is weakening amid optimism for reopening and stimulus, shrugging off civil unrest. EZ Services PMIs beat estimates. ADP's jobs report is eyed.

EUR/USD News

GBP/USD retraces gains under 1.2600, Brexit, US data eyed

GBP/USD consolidates the latest gains just around 1.26 amid dollar weakness. The Brexit impasse continues despite hopes for mutual concessions. Markit's Final Services PMI beat expectations with 29 points, still reflecting deep contraction.

GBP/USD News

USD/JPY: Risk-on keeps it on the winning side

Japan services output bounced in May but remained deep in contraction territory. US ADP survey expected to show that the private sector lost 9 million positions in May. USD/JPY retains its bullish stance near 109.00, could extend its advance to 109.60.

USD/JPY News

Editors’ Picks

EUR/USD tops 1.12 amid risk-on mood, ahead of data

EUR/USD is trading around 1.12, the highest since March. The safe-haven dollar is weakening amid optimism for reopening and stimulus, shrugging off civil unrest. EZ Services PMIs beat estimates. ADP's jobs report is eyed.

EUR/USD News

GBP/USD retraces gains under 1.2600, Brexit, US data eyed

GBP/USD consolidates the latest gains just around 1.26 amid dollar weakness. The Brexit impasse continues despite hopes for mutual concessions. Markit's Final Services PMI beat expectations with 29 points, still reflecting deep contraction.

GBP/USD News

USD/JPY: Risk-on keeps it on the winning side

Japan services output bounced in May but remained deep in contraction territory. US ADP survey expected to show that the private sector lost 9 million positions in May. USD/JPY retains its bullish stance near 109.00, could extend its advance to 109.60.

USD/JPY News

Crypto market stays strong despite yesterday's sell-off

Once the storm has passed, the real effects are zero at the technical analysis level. The impact on sentiment has been great and returns the market to a neutral level. The market is still in a phase of accumulation, according to a well-known quantitative analyst.

Read more

Gold: Prints rounding top on 4-hour chart above $1,700

Gold stays mildly offered after stepping back from $1,745. Considering the bullion’s moderate pullback since the week’s start, a potential rounding top bearish formation appears on the 4-hour chart. An ascending trend line from April 21 is on the bears’ radars.

Gold News

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology