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Like other yen pairs, NZDJPY has been trending higher since January 3rd.
The pair is off its year-to-date low by more than 600 pips despite some recent weakness.
However, the ascending channel below illustrates a bit of fatigue from buyers.
An ascending channel by itself is not bearish. It represents an uptrend hence the higher lows and higher highs that give the pattern its shape.
But a 200-pip ascending channel that has been in play for two months could be a sign of an imminent decline.
Theoretically, an equidistant channel can go on forever. Of course, we all know that doesn’t happen.
The likely scenario is that bids will eventually dry up and sellers will regain control.
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And it isn’t just this channel that makes me believe a move lower is imminent.
The fact is NZDJPY has been trending lower since the start of 2015.
One could argue that the pair failed to carve a lower low during the January 3rd flash crash.
And they’d be correct. But the momentum still favors sellers while below the 77.00 handle.
The real opportunity here, in my opinion, will materialize following a daily close (New York 5 pm EST) below channel support near 75.00.
Such a close would expose a key level that needs no introduction at 72.40.
Key resistance comes in at 76.40 followed by 77.00. The latter is the trend line that extends from the 2014 high.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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