Kiwi trade idea: How to play the short term trend accelerating higher

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Part 1) Introduction

VolatilityMarkets suggests trend-inspired trades that capitalize on market trends.

In the short term Kiwi has been accelerating higher. In the long term Kiwi has been accelerating higher. With the short term trend being the stronger of the two, we propose a long trade idea with a one week time horizon.

Part 2) Trade idea details

Buy $ 87,545 NZD , or 0.88 lots of Kiwi, take profit at $ 0.5864 level with 50.0% odds for a $ 999 NZD gain, stop out at $ 0.5731 with 50.0% odds for a $ 1,000 NZD loss through 1w time horizon.

 

The BoxPlot below outlines the take profit and stop loss level placement of the trade idea, the inter-quartile range of expected traded outcomes, as well as the best and worst case scenario on the whiskers.

Scenario analysis

There is a 50.0% probability that the take profit level will independently trade over the 1w timeframe.

There is a 50.0% probability that the stop loss level will independently trade over the 1w timeframe.

There is a 25.0% probability that neither the stop loss level nor take profit level will independently trade over the 1w timeframe.

There is a 25.0% probability that the strategy succeeds by having the take profit level touch and the stop loss level not touch over the 1w timeframe.

Part 3) NZD/USD trend analysis

NZDUSD last price was $ 0.584095. The short term trend accelerating higher is stronger than the long term trend accelerating higher. This trade goes long when the last change was higher and accelerating .

Price summary

Today’s last mid price was $ 0.584095.

Price changes

Over the past 19 Days, the price has increased by 4.21% percent.

Long-term trend analysis

This trade goes long when price has been moving higher and accelerating over the past 19 days.

Over the past 19 days, the price has on average been accelerating 5.5061 pips per day.

Short-term trend analysis

This trade goes long when the last change was higher and accelerating.

Over the last session, the price has accelerated 61.04 pips.

Part 4) NZD/USD value analysis

Over the past 19 days, the NZDUSD price increased 14 days and decreased 5 days. For every up day, there were 0.36 down days. The average return on days where the price increased is 0.547% The average return on days where the price decreased is -0.6949% Over the past 19 Days, the price has increased by 4.21% percent. Over the past 19 days, the average return per day has been 0.2216% percent.

Market skew

Over the past 19 days, the NZDUSD price increased 14 days and decreased 5 Days.

For every up day, there were 0.36 down days.

The average return on days where the price increased is 0.547%.

The average return on days where the price decreased is -0.6949%.

Part 5) NZD/USD worst/best case scenario analysis

Within 1 week, our worst case scenario where we are 95% certain that this level won’t trade for NZDUSD, is $ 0.560231 , and the best case scenario overnight is $ 0.599259 . levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that $ 0.5731 could trade and that $ 0.5864 could trade. These levels are within statistical probability.

Expected range

Within 1 week, our worst case scenario where we are 95% certain that this level won’t trade for NZDUSD, is $ 0.560231 , and the best case scenario overnight is $ 0.599259 . levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that $ 0.5731 could trade and that $ 0.5864 could trade. These levels are within statistical probability.

Probability vs payout chart

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

Key takeaways

  • Price today $ 0.584095.

  • Over the past 19 days, the NZDUSD price increased 14 days and decreased 5 Days.

  • For every up day, there were 0.36 down days.

  • The average return on days where the price increased is 0.547%.

  • The average return on days where the price decreased is -0.6949%.

  • Over the past 19 Days, the price has increased by 4.21% percent.

  • Over the past 19 days, the average return per day has been 0.2216% percent.

  • Over the past 19 days, The price has on average been accelerating: 5.5061 pips per day higher.

  • Over the last session, the price increased by 99.12 pips.

  • Over the last session, the price increased by 1.697 %.

  • Over the last session, the price accelerated by 61.04 pips .