New Zealand Official Lending Rate Trade plan is a little confusing

[EVConsultants]

Correct me if I am wrong , but I could not digest the NZDUSD trade plan posted on the Forex Signals Section today.

https://www.forexpeacearmy.com/fore...ignals-summary-wednesday-march-12-2014-a.html


Now here's the confusion I have about the Trade Plan.

The existing Lending Rate is 2.5%

The new proposed rate is 2.75%, any Lending rate increase itself should push the market up.

Now the Spike trade plan has a 3% trigger on the up side and 2.5% trigger on the down side.

Last month Shorts opened up on NZDUSD when the Lending rate was not hiked and it stayed at 2.5%.

What is the guarantee the same will follow if the Lending rate is maintained ?

Better still aren't we looking at any move at all if the Interest rate is hiked to 2.75% ?? Considering the Rate hike has come after 3 years NZDUSD and NZDJPY should move up.

I can see that the Pair NZDUSD is almost overbought as of now and a huge move to the upside is unlikely but a 50 to 100 pip total spike up is quite possible if the Release comes at 2.75%. Next resistance is between 0.8659 to 0.8675 which is also at Monthly Resistance 2 Pivot Level.

Please Correct me If i am wrong.

What say Guys ?

 

[Pharaoh]

Movement will depend on how solid expectations are. If the bulk of analysts are sure it's going up to 2.75%, any upspike on such a move won't be nearly as great as it would if everyone was sure it would stay at 2.5%. If there's great uncertainty about which way the rate will go, there should be some movement whether it stays at 2.5% or moves to 2.75%.

When it comes to news spikes, overbought/oversold and other technical indicators don't have much effect (if any). Those will only really kick in once the markets starts to settle down as the initial reaction fades.

 

[LoRio]

Correct me if I am wrong , but I could not digest the NZDUSD trade plan posted on the Forex Signals Section today.

https://www.forexpeacearmy.com/fore...ignals-summary-wednesday-march-12-2014-a.html


Now here's the confusion I have about the Trade Plan.

The existing Lending Rate is 2.5%

The new proposed rate is 2.75%, any Lending rate increase itself should push the market up.

Now the Spike trade plan has a 3% trigger on the up side and 2.5% trigger on the down side.

Last month Shorts opened up on NZDUSD when the Lending rate was not hiked and it stayed at 2.5%.

What is the guarantee the same will follow if the Lending rate is maintained ?

Better still aren't we looking at any move at all if the Interest rate is hiked to 2.75% ?? Considering the Rate hike has come after 3 years NZDUSD and NZDJPY should move up.

I can see that the Pair NZDUSD is almost overbought as of now and a huge move to the upside is unlikely but a 50 to 100 pip total spike up is quite possible if the Release comes at 2.75%. Next resistance is between 0.8659 to 0.8675 which is also at Monthly Resistance 2 Pivot Level.

Please Correct me If i am wrong.

What say Guys ?

look at the chart as a snapshot of how the world feels about that rate at each price.Remember RBNZ 's statements before shorting began.

 

[theemilym]

Ah, New Zealand. The land of Hobbitses. Having just moved out here from the UK, I can tell you guys that the pace of life is a lot slower here than in America or the UK.

 

[Pharaoh]

I've heard a rumor that there's a dragon intent on livening things up.

 

[bigdolly]

Correct me if I am wrong , but I could not digest the NZDUSD trade plan posted on the Forex Signals Section today.

https://www.forexpeacearmy.com/fore...ignals-summary-wednesday-march-12-2014-a.html


Now here's the confusion I have about the Trade Plan.

The existing Lending Rate is 2.5%

The new proposed rate is 2.75%, any Lending rate increase itself should push the market up.

Now the Spike trade plan has a 3% trigger on the up side and 2.5% trigger on the down side.

Last month Shorts opened up on NZDUSD when the Lending rate was not hiked and it stayed at 2.5%.

What is the guarantee the same will follow if the Lending rate is maintained ?

Better still aren't we looking at any move at all if the Interest rate is hiked to 2.75% ?? Considering the Rate hike has come after 3 years NZDUSD and NZDJPY should move up.

I can see that the Pair NZDUSD is almost overbought as of now and a huge move to the upside is unlikely but a 50 to 100 pip total spike up is quite possible if the Release comes at 2.75%. Next resistance is between 0.8659 to 0.8675 which is also at Monthly Resistance 2 Pivot Level.

Please Correct me If i am wrong.

What say Guys ?

Increase in lending rate not always result in a rally of national currency. If trend lacks power (because of low-impact fundamental outcome) you may not get the favourable movement, despite of obvious and clear logical conclusion.