On Monday I wrote about a key resistance area for NZDJPY.
The level in question was 76.30. It’s the intersection of channel resistance and the horizontal level that supported the pair last November.
Although there wasn’t much bearish price action to speak of, the 76.30 level has held up well so far this week.
In fact, Wednesday’s high was 76.31. It doesn’t get much closer than that.
NZDJPY is currently off this week’s high of 76.31 by 100 pips. It seems sellers are doing their part to keep the level intact as resistance.
But in case you missed Wednesday’s retest, there is a short-term pattern that you may find helpful.
Before I get to that though, I want to reiterate that the January 3rd flash crash has made it a bit more challenging to read a pair like NZDJPY.
However, the channel you see below is still relatively well defined in my opinion.
The approach is similar to what I teach for any other ascending channel: wait for a daily close below support followed by a retest of the level as new resistance.
Of course, it’s ultimately your decision as to how you trade this if at all.
This channel is a little unique in that it doesn’t begin with the swing low from January.
But again, I’m forced to work around the extreme volatility that transpired last month.
The bottom line is that as long as NZDJPY trades below 76.30 on a daily closing basis, the pair is vulnerable.
It’s going to take a close below channel support near 74.40 to open up the next target at 72.40.