NZDUSD at the Asian open with the RBNZ, a thin market plan

[Fairman]

NZDUSD at the Asian open with the RBNZ, a thin market plan

New Zealand central bank day and I'm up early for it. NZDUSD in the Asian session is thin, spreads are wide, and the decision can move it a lot. I'm posting the plan because it's a market I treat with extra care.

I won't trade the announcement or anything in the first few minutes. The spread will be ugly and fills are unpredictable. After that, I'll watch how price behaves around the pre release level on M5.

If it holds above or below the old level on closing candles, I'll look for a pullback entry with a stop on the other side of the level. If it keeps crossing the level back and forth, I'll skip it. My size is small because in thin conditions a stop can get hit by a spike that doesn't mean anything.

I'm giving myself an hour after the event. If it hasn't given me something clean by then, I'm done. The rest of the Asian session is slow and I don't need to trade it.

[Fairman]

Worth saying for anyone who has not traded the Kiwi in Asia: the spread can stay wide for longer than you expect after the decision, not just the first few minutes. I check it before entering anything, and if it is still well above normal I wait longer. A stop that is a reasonable distance on a normal day can be eaten by spread alone. The hour after the release is a good window to give yourself, because by then the liquidity usually improves and the levels mean more.

[Fairman]

I would also look at AUDUSD at the same time. The two pairs often move together, and if NZDUSD moves on its own after the decision while AUDUSD stays flat, it is clearly a Kiwi story and the move has a better chance of holding. If both move together, it might be a broader dollar or risk move and the RBNZ part is less important. It is just one more piece of context, but in thin conditions I like having it.