I’ll never hesitate to admit a mistake. It helps keep my feet on the ground and my head out of the clouds, which is the only way to be if you’re going to trade.
On Tuesday of last week, I commented on how the NZDJPY looked ready to target 79.40. This idea was a simple break of trend line support combined with the 81.00 handle on a 4-hour closing basis.
Instead of respecting the level as new resistance, the pair gained another 80 pips before returning to the 81.00 region.
Granted the 81.00 area didn’t hold as new resistance, which was one requirement of last week’s idea, but I still chalk it up to commentary that should have never gone out.
With that said, there is one thing about trading that has always been true – with the right amount of patience, time is always on your side.
If we look at the NZDJPY 4-hour chart today, we can see a bear flag has developed following the mid-December selloff. And while these patterns tend to perform best within established trends, there’s little doubt that the price action since December 20th is corrective.
From here traders can watch for a 4-hour close below channel support. As always, the most favorable risk to reward ratio will come to those who wait for a retest of the level as new resistance.
I still think 79.40 will act as support on the way down per last week’s commentary. However, the measured objective for the bear flag in the chart below is 78.80, which happens to line up with the November 28th low.
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