The NZDJPY has come off its year-to-date high of 83.80 significantly. In fact, the pair is now retesting a level that closed out the session just before the November 9th rally from last year.
Despite today’s bounce, I’m still relatively bearish here. I don’t yet have a position on, but I am keeping a close eye on recent developments.
Namely, the weekly bearish pin bar that formed a couple of weeks ago after retesting the 79.35 handle, a sign that further losses may be in store.
The candlestick pattern above suggests that sellers remain in control of the decline that has been the story for the pair so far in 2017.
However, that doesn’t mean buyers won’t step in to try and stop the bleeding. Today’s price action is just that. But try as they may, my bearish stance won’t change as long as the NZDJPY trades below 77.80 on a daily closing basis.
Even if they do manage to breach this area, buyers will still need to take out the current May high at 79.35 to show that last year’s rally is intact.
Immediate resistance comes in at 77.70/80, which is under fire as I write this. But a daily close below the trend line that extends from the current 2017 low is needed to expose downside targets.
A close below the 77.00 area would expose the current 2017 lows near 75.80 followed by 75.00. Only a close above the current May high at 79.35 would negate the bearish structure of late.
Want to see how we are trading this setup? Click here to get lifetime access.