I mentioned NZDJPY in the weekly forecast, noting to watch for a retest of former support as new resistance. The importance of the level in question was made clear by the head and shoulders pattern that has been developing since February of 2014.
The weekly chart tells the story.
With the pair now retesting the broken neckline we can watch for a bearish rejection on the daily time frame. Such price action could signal a much larger move to the downside.
How large, exactly?
Using a simple measured objective for the head and shoulders we get a price of 75.00. This price also lines up with several lows from 2013 (see chart above). Of course like any long-term objective, it could take weeks or even months before this price is realized.
A daily close back above the neckline would negate the setup and have us standing aside for a better signal to go short.
Summary: Watch for bearish price action on the daily time frame on a retest of the neckline as new resistance. Key support comes in at 84.05, 83.34 and 82.25 with a measured objective of 75.00.
