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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.

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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.

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EUR/USD stays in red below 1.0850 after weak German and EU PMI data

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Editors’ Picks

EUR/USD stays in red below 1.0850 after weak German and EU PMI data

EUR/USD stays in red below 1.0850 after weak German and EU PMI data

EUR/USD stays in negative territory below 1.0850 in the European session on Wednesday. Preliminary July PMI data from Germany and the Eurozone came in below analysts' estimates, making it difficult for the Euro to find demand. Focus now shifts to US PMI report.

EUR/USD News

GBP/USD recovers above 1.2900 following UK PMI

GBP/USD recovers above 1.2900 following UK PMI

GBP/USD has found fresh demand and regained 1.2900 in the European session. The UK PMI data showed that the private sector continued to grow in July, lifting the Pound Sterling, despite the risk-averse market atmosphere. US PMI data are next on tap. 

GBP/USD News

Gold trades higher on stagflation fears, Harris’ nomination

Gold trades higher on stagflation fears, Harris’ nomination

Gold recovers for a second day in a row, trading back up in the $2,410s as “stagflation” fears mount. The term, which describes above-trend inflation coupled with weak growth and jobs data, is a portmanteau of “stagnant” and “inflation”. 

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Bitcoin price volatility expected amid speculation of Kamala Harris joining Bitcoin Conference with Donald Trump

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