*Live market technical analysis of the NZDJPY FX currency PAIR*
Welcome back to the blog. In this blog post I am going to talk you through my complete, top down technical analysis of the NZDJPY FX currency pair which is the New Zealand Dollar vs the Japanese Yen. I will run through all timeframes from the weekly down to the 4 hour chart.
Let’s get right in to it.
On this higher timeframe chart, it is quite clear to see that for the past 5 years price has been in a fairly continuous bearish trend. After price made new 7 year prices highs in late 2014 at the 94.00 level it has continued to sell off making lower lows and lower highs as it goes. This bearish trend is supported by the weekly 50EMA residing comfortably below the 200EMA for many years and price bouncing off of a bearish trendline for the past 3 years.
Earlier this year, the New Zealand dollar suffered against the Yen strength that came in to play when the coronavirus pandemic first occurred and this was the case for most major currencies excluding the U.S. Dollar. The Yen is a safe haven currency and this means it see’s strong buyer demand in times of economic uncertainty. You can read more about this in a previous blog post by clicking here.
From the highs of around 73.00 in January 2020 down to the lows of below 60.00 in March 2020, the value of NZD dropped by almost 19% against the Yen. This is visible on the chart above with most recent price spike down to the long term multi decade support zone at 60.00. This drop in price has almost nearly been entirely recovered over the past 5 months but I believe price should still be treated like it is in a bearish trend.
The chart above shows the last 42 months of price action data and I have annotated the chart to show you why I think it is prudent to still treat the New Zealand dollar as bearish when traded against the Yen.
I have listed the confluences below.
- The weekly bearish trendline is still unbroken.
- Consecutive lower highs and lowers are still being made.
- The weekly 50 and 200 EMA’s are still aligned bearishly.
- The 200EMA and 73.00 price zone could act as resistance to stop price from climbing higher.
Dropping down to the daily timeframe chart, things actually start to get less clear and appear more choppy and unpredictable. Price is currently in a consolidation/correction type structure which is marked by the shaded box and this is ugly.
The reason why I think there could be another retest of the 73.00 price resistance zone is because if you look at the previous waves on the daily timeframe chart, price has actually made higher lows and higher highs. Therefore the near term trend from the past 3 months is now bullish. This theory is supported by the daily 50EMA crossing above the 200EMA 2 weeks ago and price bouncing off the 50EMA on its last higher low.
Instead of trying to short this currency pair now, against the current near term trend, I think it is prudent to wait for the weekly resistance level to come in to play and trade the weekly bearish trend.
The 4 hour timeframe chart shows the near term bullish trend more clearly. There is a supporting bullish trendline and the lower highs and most recent new higher high are identified. Much like the daily timeframe, price is also trading above the 4hr 50EMA and the 50EMA is residing above the 200EMA to show an overall bullish trend.
I think there might well be a small sell off and retracement on NZDJPY in the next few days and weeks which can be considered part of the current intraday trend. However, I think it is likely that price will continue to go on to make a further intraday higher high and come back to retest the weekly resistance zone at 73.00. This is where my interest lies.
My preferred trade for NZDJPY.
I have switched to my brokerage platform to show you my preferred trade entry for the NZDJPY FX currency pair. Doing this is useful because there is always a slight discrepancy on pricing and price candlesticks between charting software providers and it makes sense to do your final and most detailed analysis on the platform you will be using to actually trade.
Personally, I am not interested in the intraday or even daily price action on this FX currency pair. Instead I am waiting for price to find it’s next resistance and start to form a lower high on the weekly timeframe chart.
As I have outlined in this blog post, I think the price zone with the highest probability of resistance is the 73.00 price zone. At the point, price will have the bearish trendline, weekly 200EMA and established resistance zone to try and break through. If a weekly rejection candle forms I will enter a short trade position with the hopes of capturing the next bearish wave of this long term trend.
My downside targets are 66.500 and 60.00 which are both previous support zones. If price does make it’s way back down to 60.00 then that is an 17.80% drop in price and that will produce some excellent returns for any traders holding short positions.
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All my technical analysis is done using the TradingView platform. You can get access via the link below.
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DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.