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NZDJPY Abandons Post-RBNZ Breakout

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On Monday, I commented on the ascending channel that has been forming on the NZDJPY 4-hour chart since early May. And although we were looking for an eventual move below support, the pair evidently had other plans.

Immediately following Wednesday’s RBNZ rate decision, the rate jumped 150 pips, putting the yen cross above channel resistance on a 4-hour closing basis.

This close left us on the sidelines as there’s only one way to trade an ascending channel effectively following an eighteen-month decline, and that is to sell below support.

During Thursday’s session, we can see where the pair attempted to hold above former channel resistance by the 4-hour bullish pin bar that formed.

However, as of this writing, the pair has fallen back below channel resistance. This leaves NZDJPY vulnerable to further losses as we head into next week.

Should the day close below 75.90, there’s a good chance that the post-RBNZ rally has run its course and that Thursday’s breakout was false.

A false breakout will often trigger an extended move in the opposite direction. Only time will tell if that’s to be the case here, but this ascending channel is likely to be back in play for next week.

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NZDJPY false break of resistance

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3 comments
Ov. says

Nice setup, watching closely…

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Janula says

Looking good have been following your blogs wait in anticipation. Thank you for always giving us so much clarity.

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    Justin Bennett says

    You’re welcome, Janula. It’s my pleasure.

    Reply
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