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Forex: Ideas You Can Trade- NZDJPY Finding Bullish Resistance

Posted by Steven Hatzakis on Oct 11, 2013 3:01:00 PM

NZDJPY: Very Short Term Bullish Resistance Line Developing Over last 5 sessions.

The candle chart below shows the price history of New Zealand dollar versus the Japanese yen over the medium term. This currency pair is known as NZDJPY. The pair is trading at 81.97 (as of publication) and close to session highs of 82.21 as the close of trading the week in NY approaches (already closed in Asia).

Last Friday the NZDJPY was covered on the worldwide markets blog where a very short term bullish trend line (point 3 in yellow on chart) was plotted as a potential bullish continuation line and the support line of the medium term bullish channel (point 5 in white) was noted as a potential target. Since then, the pair found support (on point 5) and then followed up under the support line of the very short term trend line (point 3) which has acted as resistance over the course of the week.

A pull could follow if the pair fails to continue up its bullish trajectory or fails to break above the line which is resistance its momentum, and could lead to a retest of the medium term bullish support line (point 5). If this happens and support on the medium term line (point 5) fails, then the short term bearish channel (point 1 in magenta) could provide a continuation with a target of th medium term bearish channel (point 4 in red) by late October.

If a breakout to the upside of the very short term trend line (point 3) follows or a continuation under its guidance, the upper line of the medium term bullish channel (parallel to point 5) could become a target near 84.00 by the 20th of October.


 Below are examples of how to trade a bearish continuation or a bullish reversal:

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 82.23 with a Limit to take profit @ 82.65 and a stop-loss @ 81.86  Risk/Reward Summary:  Limit risk = +42 pips profit / (-37)  Stop-loss risk = Gain to Loss ratio =  1.13

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 80.98  with a Limit to take profit @ 80.22 and a stop-loss @ 81.30  Risk/Reward Summary:  Limit risk = +76 pips profit / (-68) Stop-loss risk = Gain to Loss Ratio =  1.11

Medium term daily candle chart:

nzdjpydaily october 11 2013

 

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