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NZD/JPY Signals Near-term Exhaustion Ahead of Key Resistance

NZD/JPY Signals Near-term Exhaustion Ahead of Key Resistance

Michael Boutros, Strategist
  • NZD/JPY testing upper bounds of consolidation pattern
  • Updatedtargets & invalidation levels
  • Looking for trade ideas? Check out DailyFX’s 2016 4Q Projections


NZD/JPY Daily Chart

Chart Created Using TradingView

Broader Technical Outlook: NZD/JPY has been in consolidation since the Brexit sell-off with the pair now approaching confluence resistance at the upper bounds of the pattern. The resistance range extends into the September high-day close at 75.52 and the immediate long-bias is at risk while below this threshold.

NZD/JPY 240min

NZD/JPY 240min Chart

Notes: An ascending pitchfork extending off the September / October lows has continued to define price action with the 75% line further highlighting near-term Fibonacci resistance at 75.07/25. Note that the pair has been marking bearish divergence into these highs and leaves the advance vulnerable with a break below the median-line shifting the focus towards 74.27 & 73.68.

From a trading standpoint, I would be looking for an exhaustion high (fade strength) while below structural resistance. A break below the embedded pitchfork is needed to shift the broader focus back towards basic trendline support extending off the August lows currently ~73.00. A close above 75.52 would constitute a breakout with such a scenario eyeing targets at 76.06, 76.37 & the 100% extension at 76.52.

A quarter of the daily average true range (ATR) yields profit targets of 25-28 pips per scalp. The economic docket is rather quiet until next week with trade balance figures from both counterparts & Japanese CPI on tap. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.

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Relevant Data Releases

NZD/JPY Economic Docket

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.