NZDJPY kicked off the new year with a massive 850 pip drop that spanned just thirteen trading days. However, since that time the price action has been less than ideal.
The pair has seen its fair share of swings, but the choppiness of it all has kept me on the sidelines. But there might just be an opening wide enough for us to take advantage of the current range as we head into next week.
The pair has recently come into a major resistance area near the 76.00 handle, a level defined by the trend line that extends from the March high at 78.20.
As you can see from the chart above, NZDJPY has been bumping its head on this level for the past five trading days. And while there isn’t much to do on the daily chart, there is a 4-hour price structure that shows signs of this three-week rally beginning to crack.
The ascending trend line from the August 24th low shows a series of retests including recent lows on September 7th and 8th. We can also see where today’s session retested the level as new resistance after closing below it.
A move lower next week would encounter support at the 74.27 handle, which is the August 11th high and is also an area that capped the advance on July 4th. A close below 74.27 would expose the August double bottom at 72.20.
Alternatively, a close above the five-month trend line would negate the bearish bias and turn our attention higher.
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