Daily Price Action
Shares

Price Action Setups: USDJPY, EURNZD and EURJPY

Shares

This past week we saw some volatility make its way back into the market. This was especially true for the British Pound and New Zealand Dollar. Both currencies generated extreme moves across several pairs.

At the risk of sounding like a broken record, USDJPY put in yet another bearish pin bar on the 4 hour chart today. I mentioned this setup in yesterday’s analysis. Like the last pin bar, the tail touched 102.13 before the market was pushed lower.

I’m not overly fond of the way the market is maintaining current levels, but as long as we’re closing below 102.13 I’m going to favor the downside. Look to 101.35 to 101.50 as potential support for next week.

usdjpy forex daily chart

EURNZD is my favorite setup going into next week. Support was clearly broken on Thursday and today the market gave us an inside bar near Thursday’s low, which is ideal for a short setup.

One thing to be mindful of is the support at 1.545 from the lows between Sep. and Dec. 2012. In order to get a proper risk to reward ratio, you may have to get creative with the stop loss. Still, the next support level is 90 pips below Thursday’s low and this is a high probability setup, so the potential is there.

I’ll be looking at a sell stop order around 1.555 next week so long as the price action leading up to the mother bar break looks constructive.

eurnzd daily forex chart

I wanted to post today’s bearish pin bar on EURJPY as a word of caution for anyone looking to trade it. Although the pin bar itself is well-formed and with the short-term trend, there’s one very big reason that I won’t be trading this setup next week.

See the second chart below for the trend line support that goes back to May of last year.

Although it could be argued that the lack of “room to run” is similar to the EURNZD inside bar setup above, pin bars typically need more room between the entry and the stop loss than inside bars. This is especially true of inside bars that occur after an aggressive move, such as the one on EURNZD. In other words I’m expecting more of a pullback on the EURJPY pin bar than the EURNZD inside bar – which means a tighter stop loss can be used.

eurjpy forex daily chart pin bar

This trend line has been well-respected for more than a year so I’d expect it to provide decent support next week.

eurjpy large daily forex chart

Leave a Comment:

8 comments
Piotr says

I like yours thinking thanks

Reply
    Justin Bennett says

    Thanks for the comment. I’m glad you’re finding it helpful. Enjoy your weekend!

    Reply
Colin says

As always enjoy your trade ideas, clear, no clutter, easy to make sense of what is happening on the chart with your charts that you post. Thanks a million!

Reply
    Justin Bennett says

    My pleasure, Colin. Glad to hear the charts are helpful. Thanks for the comment.

    Reply
Colin says

On another note what broker do you use? I only ask because sometimes my charts are off compared to yours.
Like on the above usd/jpy 4hr you clearly got a pin bar while I got a spinning top. I would like to see the same on both charts so if you could provide the name of your broker that would be greatly appreciated.

Reply
    Justin Bennett says

    I’m using FXCM’s five day feed (live feed of course) at the moment. It makes a difference as I’ve found that their five day demo feed can be a little different. I was using AxiTrader until ILQ recently pulled out of the U.S.

    Reply
Robert says

Hi. Great analysis. Understandably, the pin bar on 6/13/2014 (13:00 on 4HR) was retesting the resistance created by a pullback on 6/12/14 (around 01:00 on 4HR) which caused the downtrend from 102.76 (highest high) to continue to 101.58 (support area).
I would like to share my proposed perspective, which may be contrary to your objective. I recall that if there was “recent price action” against the wick of a pin bar, then it is not a reversal signal, rather it is a continuation signal. Please correct me if the previous statement in wrong. In this case here, there was recent price action against the wick of the pin bar on 6/13/14 (4HR), then this pin bar would signify a continuation of short term uptrend to perhaps breakthrough the resistance at 102.11. If the resistance (minor) holds, then the bears will continue to control in short term.
My basis is as follows: On the weekly chart, there appears to be a descending wedge since Jan 2014 (from overall uptrend). On the daily chart, it has been consolidating since 4/22/14. The 2 daily bars on 6/12/14 and 6/13/14 appears to be a bullish harami (or inside bar). Please correct me if this is wrong. If I am wrong, then we learn from our mistakes. What do you think? Thank you.

Reply
    Justin Bennett says

    Thank you. I consider a pin bar a valid signal until the tail is broken. In the case of USDJPY, the market hasn’t been able to break 102.13, much less close above it on a 4 hour basis.

    The fact that the market was able to rally on Friday and retest this level shows that this pair still has some fight. But I’ll let the market prove me wrong with a close above this level. I try to stay away from the “what if” scenarios and let the market do the heavy lifting 😉

    Until the pair can close above 102.13 I’m going to assume that we’re still in a range between 102.60 and 101.30/50. I’m fine with being wrong, but the market has to show me something first.

    Reply
Add Your Reply