Just when it looked like the New Zealand Dollar was going to steal the show today, the British Pound comes through with huge gains across the board.
Before we get to that, I’d like to point out the USDJPY trade setup that presented itself today. I tweeted about this setup here:
#USDJPY running into resistance here – retest of 101.50 on the way? pic.twitter.com/fp5yVIQfCF
— Justin Bennett (@JustinBennettFX) June 12, 2014
The idea behind this trade setup was a simple trend line break followed by a retest of a key level. Combined with the bearish price action as illustrated below, it was enough for me to take a short entry with a tight stop loss.
Depending on where you placed your stop loss, this was a 4 or 5R trade setup with a profit target between 101.35 and 101.50. In other words a 1:5 risk to reward ratio.
Here’s the setup as it stands now…
A quick update on yesterday’s AUDJPY setup. This was a bit riskier as trade setups go but I knew that going into it. All looked okay late last night, but this morning’s 4 hour bullish pin bar was enough for me to exit with a small loss.
Today’s price action indicates indecision as to where the pair goes from here. The scheduled BOJ event risk later tonight might shed some light on where we go from here.
I mentioned GBPCHF in yesterday’s post stating that a break of the 1.5115 level could give way to a larger breakout. Today certainly didn’t leave any questions on the table about the break of this key level.
So where do we go from here? The market is far too extended at the moment to even think about an entry. I’ll be watching this pair as we go into next week for a possible pullback into the area circled below.
Last but not least is NZDJPY. The pair seems to be forming a bullish wedge which typically leads to a break to the upside. I’ll be watching how the pair trades around the 87.45 level should we get a pullback into this area.
Let’s not forget, however, that this is considered a ranging market at the moment which means any bullish price action around 87.45 would have to be extremely convincing to justify an entry. Otherwise we’ll look to the lower trend line of the wedge formation to act as potential support.
