EURNZD Trading tutorial

The EURNZD is the abbreviation for the Euro and the New Zealand dollar pairing in the forex market.

Both currencies are among the top-10 most-traded currencies individually. And the pair is one of the most liquid minor pairs in the market.

Several factors impact its exchange rate, causing it to be one of the pairs with the highest volatility. 

Though some traders avoid it for the high risks, the EURNZD appeal to many other traders because of the many opportunities for profit that it presents.

Several strategies can help you trade the pair successfully. We will explain these strategies and how to use them in this tutorial.

Before that, let’s understand the background of the Euro and New Zealand dollar in the foreign exchange market.

Understanding the currencies and the economies that drive them will help you successfully apply accurate strategies in trading them.

Background of the Euro and New Zealand dollar

The EURNZD combines one of the strongest currencies, the Euro, with the highest yielding commodity currency in this pairing.

The Euro, an official currency for EU countries, is on the whole, influenced by these economies. These combined economies are considered the 2nd largest in the world.

The currency is issued and regulated by the European central bank. The ECB makes certain that the currency remains stable. 

The Reserve Bank of New Zealand(NZ central bank) is responsible for issuing and regulating the New Zealand dollars.

New Zealand operates a stable economy that depends on commodity exports and tourism. Its principal trade partners are China and Australia. Unemployment and inflation rates are low, with economic and GDP growth. Because of this, it owns a robust economy with a strong national currency. 

Events around the Eurozone, prices of commodities, and the economies of the key trade partners all immensely influence the EURNZD pair.

What influences the EURNZD exchange rate?

As we mentioned, events around Europe, prices of commodities, and the economies of the key trade partners all have an impact on the value of the pair.

The value of the Euro is determined by major political events in EU countries and announcements made by the European Central bank.

The New Zealand dollar is affected by its economy and the economies of its top trade partners (China and Australia). 

Other factors that influence the EURNZD are

1. Commodity prices

As we mentioned, the New Zealand dollar is a commodity currency as the country’s economy depends on commodity exportation. A rise in the price of these commodities will lead to a spike in the dollar. This in turn affects the exchange rate. 

2. Increased export.

New Zealand’s main exports are milk and other dairies, Meat, and wool. If the demand for these items increases, it’ll boost its GDP. And cause the value of its dollar to go up.

3. The weather.

Bad weather conditions can hamper agriculture, a vital part of New Zealand’s economy. If this happens, its economy will take the hit, causing the EurNzd exchange rate will rise.

What session is EURNZD, and when does it open?

The EURNZD falls under the London session, which opens at 7 AM GMT. 

But the spreads are tightest during the New York London overlap, that’s between 8 AM – 12noon New York time. This time is the best to trade this pair as there are significant activities in the market during this period.

How do you trade on Eurnzd?

There are 3-steps to trading this pair successfully. They include:

Step-1 Conduct market analyses

First, analyze the EurNzd market. Check its past trends and the current trend to help you ascertain how its price moves. It will guide you into choosing the right approach to trading the pair.

Step-2 Find a good strategy 

The strategy you choose will determine your success. Some approaches are better than others for individual forex pairs. And some are suitable at all times. It’s best to research as many strategies as possible and choose a fitting one for the currencies you want to focus on. We will recommend some of the best trading strategies for EurNzd in this tutorial.

Step-3 Find a good broker

Your broker and trading platform are prime considerations in your trading. You will need a broker with a license and a fine reputation to succeed in your forex trading.

Among the many reputable brokers are markets.com, Vantagefx, and Roboforex. We will give a brief review of what they offer below this tutorial. 

Trade the EurNzd pair using the steps below

Once you have selected a broker and completed your registration, it is time to trade for real.

Ensure you fund your account with at least the minimum deposit required. 

1. Log in and select the EURNZD pair

Sign in to your account by entering your email and password. Then click on quotes and select EURNZD from the list.

2. Read the price

By reading the Buy-Sell price, you can know what spread is charged at that time. Though, most brokers offer variable spreads. So it might change before you close that trade. But at least you’ll have a rough idea of the profit before you begin.

3. Select your position 

We explained the importance of analyzing the market beforehand. At this point, you would know what position is favorable for you. In the pair, the Euro is the base currency. So in the BUY position, you would be betting for its price to strengthen against the New Zealand dollar. If you choose the SELL position, it would be the opposite.

4. Monitor your trade and exit when you choose.

Depending on the strategy you use, you may need to either stay glued to your computer screen or check on the trade from time to time. Once it has matured, at a time of your choosing, you can then exit and secure your profit.

Let us examine some constructive trading approaches

  1. The best trading strategies for EURNZD. 

• Range trading strategy 

You identify the support and resistance level of specific price ranges in range trading. Then you monitor that price movement within the 2-levels.

When the price moves close to the resistance level, it is a good time to enter a SELL position. And if it moves nearer to support, you place a BUY trade.

Note, it is safer to monitor the chart to know when the price continues to fall below the support point or stay above the resistance level. It is an indication that the price would hold.

• Breakout range trading.

This approach involves placing your trade in the direction of a breakout in the range. 

A considerable increase in the volume of the breakout should be a good indication that the price will hold.

If the price of the EURNZD has moved outside the range a few times, that might be a sign that the breakout is genuine. You can place the relevant trade in the direction of the breakout. 

A safe bet will be to put a buy-limit order at the top of the trading range (support level). Then set your stop-loss at the opposite point to protect your funds, in case it’s a false breakout.

• Pullback trading strategy 

With this strategy, traders take advantage of price correction during an ongoing trend.

Correction occurs when the predominant trend is temporarily interrupted. 

An example of a correction is a short-term downtrend in the prices in an uptrend market condition.

The price always ‘pulls back shortly after, and traders time their entries to join the trend when the market is in this condition.

Several tools such as Moving average, trendlines, and Fibonacci are used to spot a pullback in the market.

In minor crosses like the EurNzd, this market condition is common. Traders take full advantage of it and make a profit. 

• Trend trading strategy 

A trend is a market condition where prices move in a particular direction for a certain period.

Trends are synonymous with the EurNzd pair. Sometimes it’s short-term. Other times it lasts a little longer.

The trend could be upward movement in prices(bullish market) or falling prices(bearish). Once you identify the prevailing trend, it’s an opportunity to place the trade with the best potential for a good profit.

There are indicators used for spotting trends. But a simple way to do it is by looking for consecutive rise or fall in prices to determine if there is an uptrend or downtrend in the market.

• Swing trading strategy

Swing trading is a short-term approach where you leave your positions open between a few minutes to a few days.

Traders use this approach to take advantage of market trends, opening and closing positions to gain a specific amount of pips within a set time. 

The approach attracts lower costs for the trader as most swing traders don’t leave their positions open for longer than 1-night.

If you prefer this strategy, you must choose a broker that offers competitive spreads. Your focus will be to earn small amounts of pips from multiple trades. These small amounts can then add up to a significant size at the end of that trading period. You would not want high spreads to eat into the profits for each trade.

Swing trading is one of the most common strategies and comes in different forms, including the following:

• Intra-day trading

In intra-day daying, you find a trend, open a position, and exit the trade within the same day.

Some traders open multiple trades within the day. But all positions are exited before the end of the day.

With this approach, you’re able to avoid any overnight trading fees.

• Scalping strategy 

With scalping, you hold your trade only for a few minutes.

Scalpers usually dedicate time in front of their computer screen, constantly opening and closing trades during their desired trading time.

Essentially, the goal is to earn a certain amount of pips from a specified amount of trades in a day. Other traders may set a target of 400pips in a week. A scalper can aim to make at least 10pips each from 10-trades in a day. Each of these trades will be open for at most 5-minutes. If the scalper achieves this goal, they’ve surpassed the 400pips weekly target and saved cost on swap fees.

Scalping is an effective and popular strategy used for the EurNzd pair. 

Any of these approaches listed above will require analysis to help you identify the market conditions. 

Below, we explain some indicators that can be used alongside these strategies

• Moving average indicator 

This indicator helps you spot trends in the market.

With it, you can determine the average price of the EurNzd within specified periods, usually 10-days, 20-days, 50-days, or up to 200-days.

Once you know the average exchange rate, you can ascertain the current trend and predict the next price move. 

There are 2-types of moving averages 

● The simple moving average also called SMA

● The Exponential Moving average, known as EMA.

Most trading platforms provide a tool for calculating moving averages. 

The Simple Moving average is the average price of the pair over the period you’re looking at.

For example, the simple moving average for 50 days will be the sum of closing prices for the last 50-days, divided by 50.

Exponential Moving average is a more reliable indicator because it presents you with the most recent figures.

 ATR Indicator

ATR stands for Average True Range. It is a technical analysis tool, useful for identifying price ranges and measuring the volatility of currency pairs such as the EurNzd.

Most platforms with ATR indicators already have an inbuilt calculator that computes prices within a set period and shows you the results.

But to calculate it manually, you will need to find the True range (TR).

The value of the true range is the highest amount from the following:

1. Current high price minus the previous closing price

2. Current low price minus the previous closing price

3. Current high price minus the current low price

The typical period calculated is 14-days, but you can change the settings to the number of days you want. 

After finding the true range value, you can then calculate the ATR. 

The formula is:

(Prior ATR × 13) + current TR)/14

A high ATR means high volatility in the market and vice versa.

This presents you with the opportunity to trade in the current range. But you must remember to include risk measures. The higher the ATR, the bigger the risk and profit potential. Therefore, your stop loss and limit orders should be in place. And you should widen the stop and limit orders as the ATR increases. 

The ATR indicator is often combined with other tools to get stronger trade signals.

• Price action strategy. 

Price action trading is also called natural trading. It involves studying price movements in a naked price chart to predict the market’s next move.

Price action trading is sometimes combined with the ATR Indicator to strengthen the trader’s forecast.

A price chart consists of candlesticks which shows the movement of the prices.

To trade price action, look at the candlesticks in the price chart to identify the trend. A predominant rise in price indicates an uptrend and might be a signal to go long. A drop in the prices might signal the opposite. 

To ensure that the trend identified is valid, these prices must have been rejected several times by the support and resistance levels.

Stop-loss and or take profit orders are useful risk management tools that should be used while trading EurNzd using price action.

Now, we will give you a brief review of some brokers who offer the EurNzd forex pair.

Roboforex

● Minimum deposit and fees

Trading with Roboforex requires an initial minimum deposit of $10. Your trading account can be funded easily using some of the famous payment options, such as credit, debit cards, or bank transfers. There are no fees on funding and withdrawal from your trading accounts. But leaving positions open overnight may attract some charges.

● Regulation

The broker operates under the regulation of its home country, Belize’s financial body, the IFSC. They also hold an internationally recognized license, CySEC, that regulates European brokerage firms. 

● Spreads and leverage

Spreads start from 1.6pips for major pairs and vary according to market conditions. Leverage is provided up to 1.2000, giving you the opportunity to increase your gains with minimal investments.

  • Platforms

The platform runs its trading services on the famous Mt4, Mt5, cTrader, and RTrader. 

  • Assets

40+ forex pairs, metal, energy, gold, stocks, indices, and cryptocurrencies are all offered. So there are opportunities to increase your portfolio.

  • Support

Customer support is available through email, phone, and live chat throughout the weekday. Traders can run their business with peace of mind, knowing that support is within reach.

Pros

  • A low minimum deposit makes it easy to start trading.
  • Free demo is offered

Cons

  • Phone support is not available in some regions.

Vantagefx

  • Minimum deposit and fees: 

Vantagefx required a higher amount of $200 to start trading. Like Roboforex, the broker does not charge for deposits and withdrawals and offers highly competitive spreads starting from 0pips for major currency pairs.

  • Regulation

This broker is also properly regulated by its home regulatory body, the Australian Securities and Investment Commission, Asic. It also holds a license from the Islands monetary body, Cima (Cayman Islands Monetary Authority.)

  • Maximum leverage

Enjoy leverage up to 1.500, trading with Vantagefx.

  • Assets

Traders have access to trade up to 40+ forex pairs and CFDs.

  • Platform

Mt4 and Mt5 mobile and web traders are available options to use.

  • Support

Customer service is also reachable 24-5 through phone support, live chat, or email.

Pros

  • Low spreads
  • Good customer support
  • Copy trading is available. 

Cons

  • Limited assets to trade.

Markets.com

● Minimum deposit: $100

● Regulation: FCA, ASIC, CySEC, FSCA

● Spreads and fees: As from 0.6pips. 

● Commission: $15 minimum for CFDs.

● Maximum leverage: 1:400

● Platforms: Mt4, Mt5, MarketX, Marketsi.

● Assets: 67+ forex pairs, indices, stocks, commodities. 

● Support: 24-5 customer service via phone, live chat, and email

● Loss rate(Retail customers): 67%

Pros

● Competitive spreads

● Free demo

Cons

● High fees on commodities and indices

Conclusion 

The EURNZD is a worthwhile pair if traded with the right strategy at the appropriate timeframe. Its relative stability and predictability allow traders to make safe speculations and earn profit.

Many other indicators can increase your chances with this pair.

Whatever strategy and indicator you choose, remember that trading forex carries risks. Use your risk management tools and invest from your disposable income. 

Witzeltrading.com

Contact

Witzel Capital LTD.

Cyprus, 7557 Larnaca, Mazotos Hills 4, Block D, Flat 203

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