After a 1,000-pip rally off of the August low, NZDJPY is in the process of completing a topping pattern that could trigger a revisit to former lows.
You may remember the sixteen-month head and shoulders pattern that we traded back in June. This ended up being my largest profit ever from a single trade idea, which of course was compounded as I added to the position along the way.
Fast forward to today and we can see that the pair has now erased over 1,000 of those pips since the August 24th low at 72.40.
However, those gains may be coming to an end as the yen cross appears to be slipping once again. The 4 hour chart below illustrates the head and shoulders reversal, which would target a measured objective near 77.80.
Although the pair has now closed below the trend line that extends off of the October 8th low, there is still some support that needs to be dealt with before a move lower can commence.
Another look at the 4 hour chart (below) shows the horizontal level at 80.25 that has been in place since the second week of October. With this in mind, it would be prudent to wait for a close below this level before considering a selling opportunity.
Summary: Watch for a selling opportunity on a close below 80.25. Key support comes in at 78.75, 77.55 and 74.50. The measured objective for the pattern can be found at 77.80. Alternatively, a close back above the trend line that extends off of the October 8th low would negate the bearish bias and turn our attention higher.