Daily Price Action

NZDJPY Bearish Inside Bar Pin Bar Combo in Focus


Yesterday I posted some of my top trade ideas for 2016. In that post I mentioned the idea that NZDJPY may be gearing up for a substantial move lower, the likes of which we haven’t seen since the 2008/2009 era.

The monthly chart below shows why I think such an outrageous move could be in the cards for 2016.

NZDJPY monthly chart

Take note of the eerie similarities between the 2000 to 2007 bull trend and the most recent move up. Even the time factor is similar, showing a mere 9 month difference between the two cycles.

Could all of it just be coincidental? Could NZDJPY find a bid at trend line support and rally higher to eventually take out the 2015 highs?

Anything is possible, but fourteen years of trading have taught me that what may seem like a coincidence is generally an opportunity in disguise; you just have to know how to exploit it. This is especially true when working on such a high scale as that of the monthly chart.

Another key factor that leads me to believe that a move lower is coming is the selloff that we have already seen transpire across most other yen pairs. The GBPJPY, AUDJPY and CADJPY have all faced intense selling pressure for several months now. NZDJPY is no stranger to selling pressure either, having already shaved off 1,700 pips since the 2015 high at 94.

Of course in order to take advantage of such opportunities, we need a trade setup that meets our criteria. For that we turn to the daily chart.

After sliding more than 500 pips to start the year, NZDJPY found a minor bid this week, albeit a small one. While many thought the pair to be “oversold” following the one-week selloff, the buying was never very inspiring relative to the selling the week before.

Yesterday’s session may have put an end to any belief that higher prices are likely in the coming sessions. Despite climbing back above the 77.50 handle on an intraday basis, the pair failed to close above it, carving out a bearish pin bar in the process.

The sell signal came on the heels of Tuesday’s inside bar, giving us an inside bar pin bar combination. This type of setup doesn’t come around often but it does usually carry a high success rate. One key factor for those contemplating a short here will be the confluent support area that resides just 240 pips below current prices.

Do note that we have Australia employment figures that are scheduled for release at 7:30pm EST. Although the figure targets the Australian dollar, the impact can often overflow into the New Zealand dollar due to the close economic ties between the two countries.

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NZDJPY inside bar pin bar combination

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